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Unformatted text preview: cent, and in special cases 97% on one–to–four–unit properties. As a matter of policy, many lenders lower their loan–to–value ratios on three– and four–unit properties, non–owner–occupied properties, land loans, and refinance loans. In some cases, conventional lenders will make 100 to 125% loans, but these are not considered “standard loans” and often carry excessive loan fees. 3. Maximum loan amounts – Each lender sets its maximum loan amount. The loan amounts vary by type of property. For owner–occupied residential properties of one to four units, many lenders use the Fannie Mae/Freddie Mac loan maximums discussed in Chapter 7. These are “conforming” loans, based on the lenders' ability to sell the loans to
Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 15-20 15: REFINANCING OR NOT AND CHOOSING A LENDER
FNMA/FHLMC, which set maximum loan limits. These loan limits change each year, and a borrower should call a loan officer or mortgage broker to determine the current limits. Other conventional lenders specialize in jumbo loans (loans greater than the Fannie Mae and Freddie Mac limits) for higher–priced homes. 6. Prepayment penalties – As already noted, most conventional lenders are no longer charging prepayment penalties. When they do, the typical prepayment penalty on a conventional loan is six months' interest on the amount prepaid that exceeds 20% of the original amount of the loan. However, penalties vary with the lender. They can even be eliminated in some cases. For example, a lender may waive the prepayment penalty if the seller has the new buyer finance the purchase with the same lender. Finally, there is no reason to charge penalties to pay off an adjustable rate mortgage (ARM), since the rate varies with the interest rate market so that the lender need not be burdened with finding productive use of loans that are prematurely repaid. (In the past, lenders paid off on high–interest loans in a low–interest environment charged penalties to offset some of the interest losses and loan origination costs.) Under California law,...
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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.
- Spring '10