real estate finance - full book (500 pgs)

Title ii mortgage insurance loans title il of the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: of satisfying the 3% requirement. Calculations are set forth below. Example 1: Over $50,000, up to $125,000 (Low Closing Costs) Sales price/value Maximum LTV ratio Maximum loan amount Sales price/value Maximum loan amount Down payment $100,000 X 97.65% $97,650 $100,000 –97,650 $2,350 5-29 Dynasty School (www.dynastySchool.com) REAL ESTATE FINANCE Minimum qualifying closing costs to be paid 3% investment needed $650 $3,000 Example 2: Over $125,000 (Low Closing Costs) Sales price/value Maximum LTV ratio Maximum loan amount Sales price/value Maximum loan amount Down payment Minimum qualifying closing costs to be paid 3% investment needed $150,000 X 97.15% $145,725 $150,000 –145,725 $4,275 $225 $4,500 FHA regulations state that the required cash investment must be from the borrower's own funds, however, home ownership using FHA financing is made even easier: the funds–the 3% investment–may come from a bona fide gift, a loan from a governmental agency or instrumentality, or a loan from a family member. Any loan payments in addition to the primary loan must be counted in qualifying the borrower. The junior lien must not require a balloon payment within five years from date of execution. The 3% investment may not come from loans from other sources, such as the seller, the builder, or premium pricing. If the seller or builder offers a $1,000 “decorating allowance” or similar inducements to purchase, the maximum loan basis is decreased by that amount. FHA TITLES & SECTIONS The National Housing Act of 1934 created the Federal Housing Administration. The act has eleven titles, or subdivisions, with further subdivisions called Sections. TITLE I – PROPERTY IMPROVEMENT LOANS FHA will also insure loans to finance improvements, alterations, and repairs of individual homes, apartment buildings, and nonresidential structures. Under Title I, loans on single family homes may be as high as $17,500 and the term of the loan may extend to 15 years and 32 days. Anyone eligibl...
View Full Document

Ask a homework question - tutors are online