real estate finance - full book (500 pgs)

If the conventional lender wants to reduce loan

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Unformatted text preview: –guaranteed home loans had a tremendous influence upon the changing pattern of demand for loan funds and home loan practices. Historically they have offered the borrower a lower rate of interest, highest ratio of loan to appraised value and longest maturity. However, since December 1, 1983, HUD no longer controls FHA–backed interest rates; they are free to float to market rates. DVA–backed mortgages still have interest rates controlled by the DVA Administrator. With the exception of new tract sales, usually more paper work is involved in obtaining government–backed loans and more time is consumed in their processing. In periods of tight money they may be almost unobtainable or certainly available only if the seller is willing to discount at an extremely high rate. CONVENTIONAL LOANS Where the borrower has a substantial down payment and time is important, conventional loans offer advantages even though the maturities may be shorter and payments and interest rates may be higher, especially when a fixed–rate mortgage is sought. These loans usually have shorter processing time, more flexible terms, can be had on a wider variety of properties, and, overall, cost the borrower less in total interest payments. Laws affecting the ratio of loan to value vary among the different conventional lenders or financial institutions. SELECTION OF A CONVENTIONAL LENDER The selection of a proper conventional lender for a client is an involved process and should be done with great care. A real estate salesperson should look at all of the conventional lenders and not just at the interest rate. The salesperson who selects a lender based only on the interest rate may be doing a disservice to his or her client. Also, the policies of a conventional lender can change from time to time. One reason for this change may be that the lender has a commitment from a different investor and the underwriting guidelines of that investor are different, thus the lender must change its policies. So...
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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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