real estate finance - full book (500 pgs)

However the loan will be based on the fha appraisal

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Unformatted text preview: for conventional mortgages. Sometimes the interest on FHA was too much below the conventional market and thus lenders were not interested in making FHA loans even though the risk was less. In order for the lender to be interested, he will require the seller to pay additional money up front. This money is usually expressed as a percentage of the ban, called points. Each point is equal to 1 percent of the loan amount. These points may be paid by the seller. These discount points ranged from 1 to as many as 8. Thus, if a person wished to sell a house and the FHA loan was $57,000, Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 5-26 5: GOVERNMENT PARTICIPATION & BACKED LOANS each point of discount that was charged by the lender cost the seller $570, or 1 percent of the loan amount. Conforming to MPR – The final major disadvantage to the FHA program is that if the property does not meet the minimum standards, prior to the final approval of the loan the property must be brought to the minimum. This cost can range from a few dollars to several thousand. The cost of repairs is usually borne by the seller, thus making this a disadvantage to the seller. In some instances, sellers will not sell their property FHA– insured because they know that it will not meet the minimum standards. From the purchaser's point of view, however, it is an advantage. CHARACTERISTICS OF FHA LOANS The maximum loan fee is 1% of the loan amount. The buyer normally pays this fee. Secondary financing is allowed with a new FHA loan provided the combined FHA loan and second loan do not exceed the FHA maximum. The maximum term is 30 years or 75% of the remaining economic life of the property, whichever is less. The amount of remaining economic life is determined by the appraiser. The FHA requires that monthly payments include principal and interest, taxes, fire insurance and Mutual Mortgage Insurance (MMI), often referred to as PIT...
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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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