real estate finance - full book (500 pgs)

Savings banks formerly sls a savings bank is a

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Unformatted text preview: ake–out” commitment from some other lender–most often a savings bank–for the permanent mortgage loan following completion of improvements. Large commercial banks play a major role in financing business and commercial properties, while some smaller ones deal largely with home loans. Banks may make home loans up to 95% loan–to–value ratio, for as long as 30 years on single–family dwellings. Many banks require private mortgage insurance on loans whose ratio of loan–to–value is in excess of 80 percent. Banks make swing loans, sometimes referred to as bridge loans, which are short–term interim loans used to bridge the time during which a property remains unsold. For example, if you as home–owner purchase a replacement house before selling the first house, a swing loan would provide the funds to fill the gap until the sale proceeds provide the funds to pay off the loan. In short, you found the right house at the right price, but haven't sold your existing home, so you secure a loan to purchase the replacement dwelling, with the loan to be repaid as soon as the existing house sells. The lien may exist on both the old and the new homes. Swing/bridge loans may have monthly payments or may be set up to be paid in a single lump sum upon sale of the old home. SAVINGS BANKS (FORMERLY S&LS) A savings bank is a financial intermediary that accepts savings from the public and invests these savings principally in real estate trust deeds and mortgages. Previous called Savings and Loan Associations, most changed their name after the S&L crisis of the 1980s. Today they are frequently referred to as “thrift institutions.” Type of institution – Depository financial intermediary, together with Mutual Savings Banks (discussed below), they are classified as “thrifts”. Dynasty School (www.dynastySchool.com) 3-3 REAL ESTATE FINANCE Organization – Savings banks may be either stockholder or mutually owned, and chartered under either state or federal laws. A...
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