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Unformatted text preview: ably unacceptable. The trial court was affirmed by the Court of Appeals. CONVENTIONAL LOANS
Any loan that is not a government–backed loan is called a conventional loan. Government backed loans were discussed earlier in Chapter 5. What does this mean? A conventional loan is not guaranteed or insured by an agency of the federal government. It may, however, be insured by a private mortgage insurance company, as discussed below. The guidelines for these conventional loans are set by the investor criteria, such as FNMA or FHLMC, covered in previous chapter. Most lenders prefer to lend on single–family owner–occupied homes or condominiums. Conventional lenders, however, make loans not only on owner homes and one– to four– unit properties, but also on larger complexes. Property types that conventional lenders normally make loans on include larger apartment complexes, commercial shopping
6-10 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 6: HARD MONEY LOAN & CONVENTIONAL LOANS
centers, office buildings, and industrial property. Just as many government lenders do not handle all programs, the same is true for conventional lenders, which often prefer to work with only certain types of conventional loan programs. No single conventional lender dominates the market; thus a mortgage loan broker may take a borrower's application file to more than one lender. If a loan is not approved by one lender, the mortgage loan broker may obtain approval at a second or third or fourth conventional lender, since each lender sets its own loan criteria. In today's market, many mortgage loan companies have taken the lead in offering low down payment loans to qualified buyers. The typical down payment required on many of these loans ranges from 5 to 10%. Many loans also offer reduced loan origination fees and expanded debt–to–income ratios. The advantages and disadvantages of conventional loans versus government–backed loans are outlined below. ADVANTAGES OF CONVENTIONAL LOANS
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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