real estate finance - full book (500 pgs)

Since 60000 25 x 240000 is the maximum guarantee to

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Unformatted text preview: than the sales price. If a property sells for $140,000 and the DVA believes the property is worth $145,000, the CRV will show a value of $140,000. However, if it believes the property is worth only $136,000, the CRV will show a value of $136,000. CRVs are valid for six months. Secondary financing – It is commonly believed that a second loan on a DVA transaction is prohibited. This is not technically correct. Seconds are allowed but rarely used because they are not practical or not understood. Secondary financing can be approved on a case–by–case basis. The DVA Regional Office will determine on what basis it is acceptable. Generally, it is desirable that the second carry the same interest rate and terms as the first loan. The first and second loans added together cannot under any circumstances be more than the CRV. An example where a second can be used is as follows: Sales price/CRV Maximum loan available from lender Down payment from buyer Second mortgage Dynasty School (www.dynastySchool.com) $266,000 –240,000 – 20,000 $ 6,000 5-41 REAL ESTATE FINANCE In this example, we need an additional $6,000 to complete the transaction. If the seller is willing to carry back a second loan at the same rate and terms as the first, the sale can be made. Termite reports – The DVA requires that a structural pest report be obtained from a recognized inspection company. Necessary work must be done, and both the veteran and an inspector must certify that the work is done satisfactorily. Closing costs – The DVA has several rules that are unusual. The DVA will not allow the veteran to pay for nonrecurring closing costs, such as termite reports, escrow fees, tax service fees, document preparation fees, notary fees, or a certificate of reasonable value that was ordered before the veteran agreed to purchase the property. The DVA allows the seller to pay all of the closing costs, including prepaid expenses and recurring closing costs such as tax impounds, fire insurance, and so on. Most lenders require buyers to pay for prepaid items. A “seller pay all...
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