real estate finance - full book (500 pgs)

Lenders usually ignore the one slow payment because

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Unformatted text preview: s, painters, roofers, other construction workers and even loan brokers or appraisers. No one working in the construction industry can be sure of the length of his or her job, since it is so transitory. Self–employed borrowers are another group that are carefully scrutinized to determine their stability of income. Lenders look at the length of time they have been in business, the net income, financial condition of the business, and the general prospects for the particular type of business. 3. Age of the Borrower – One other factor that was once thought to affect the stability of income was the age of the applicant. Today, with the passage of federal anti–discrimination legislation, the age of the applicant cannot be used as a factor to establish the stability of the applicant's income. For example, in the past a person who was 45 years old would have had a difficult time securing a 30–year mortgage because many lenders would not make loans to a person where the term of the loan would extend past age 65, then the retirement standard. Thus, the 45– year–old person could only get a 20–year loan no matter what his or her profession. Age is no longer a factor. SOURCE OF FUNDS FOR DOWN PAYMENT AND CLOSING COSTS After the employment pattern and income of the prospective homebuyer is established, the next major item that should be determined is the source of funds for the down payment and closing. This information is necessary not only to establish the maximum house price, but to provide it for the lender who will ask the prospective home–buyer to supply it. There are two basic sources of the funds: from cash on hand (that is, bank accounts) or from the sale of property. If the source is either a savings or checking account, the lender will verify with the bank or financial institution the date the account was opened and the average balance for at least the past 60 days. If the balance has seen a dramatic increase in the past sixty days, the lender will ask the prospective homeowner to explain the...
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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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