real estate finance - full book (500 pgs)

Qualifying the buyer real estate is expensive almost

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Unformatted text preview: ion and the various forms involved will be discussed in this chapter as a means of outlining the procedure required to render a proper underwriting decision. Real estate licensees can spend consider able effort in showing homes to potential clients. If these clients have not been pre qualified, this effort may be meaningless. CREDIT AS MONEY A prospective buyer with enough money can buy anything desired that is available in the market. Very few people could buy real estate if it had to be bought with cash. The “qualified” homebuyer, however, can buy with credit. Credit is a Latin–based word meaning “to trust” or “to believe.” A banker will lend you money based on the belief that you will pay it back. The banker grants you “credit.” Sometimes the money a banker loans you is “paper money” but usually it is “credit money” or “check money.” We are all familiar with “check money.” This is a written instruction to your banker to pay money (paper or credit) to someone else. Throughout the entire series of complicated transactions it is customary that no actual money (paper money or coin) changes hands at all–it is all handled by the bookkeeping activities of the bank (or banks, if there is more than one bank involved, as is usually the case). From the Dynasty School ( 13-1 REAL ESTATE FINANCE consumer's viewpoint, credit is like money–both confer power to purchase goods and services. Lacking money, a consumer who has credit can nevertheless buy today. Credit and credit rating will be discussed in more details in later of this chapter. THE FINANCING CONTINGENCY It has been estimated that approximately 99% of real estate purchase contracts contain financing contingencies. A buyer making an offer describes in some detail the financing proposed, and conditions the offer upon obtaining financing within the limits described. Typically the buyer then agrees “to act diligently and in good faith to obtain all applicable financing.” If the propo...
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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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