real estate finance - full book (500 pgs)

Backend ratio so far we have discussed only a

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Unformatted text preview: repay the mortgage. Guidelines used by FHA, Fannie Mae, and Freddie Mac to determine what constitutes a long–term debt will be discussed later. What are some of the typical debts that prospective homebuyers may have? We will describe some below. Installment debts – This type of debt can be payments made on a regular basis to department stores for a revolving charge account or a contract on appliances. It can also be payments made on bank credit where there is a continuous balance. Underwriting has become more stringent in this area and credit card payments will be attributed to the borrower even if there is a zero balance. This may be a nominal assessment of $10.00 per month per card, but it represents a potential to expand credit outstanding on the part of the borrower. Most families have a car loan or a bank loan that may be counted as a long–term debt. Loans other than bank loans – Many people are members of credit unions and have loans from the credit union that are used for many purposes. For example, they may be used to purchase stocks and sometimes to purchase recreational lots or acreage. Comaker or endorser of a note – In some cases a member of a family will have been a cosigner on a note or loan for one of the older children or a friend. This will have to be shown on the loan application of the homebuyer. Child support or alimony – This type of court enforced obligation of the prospective homebuyer can be the major payment made apart from the mortgage payment. It should also be pointed out that with the changing divorce laws throughout the United States, in addition to the father being required to make child support payments, some mothers have been ordered to make child support payments to the father if he has been given custody of the children. These are just a few examples of debts and obligations that may affect the ability of the prospective homebuyer to qualify for a mortgage. Dynasty School (www.dynastySchool.com) 13-19 REAL ESTATE FINANCE DEBT ANALYSIS In the past, many real estate...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

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