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Unformatted text preview: s in a better position to make this decision. The lender checks the value of the property to make sure it is high enough to grant the loan. If the loan requested is based on a $480,000 sales price but the lender's appraisal is only $450,000, the lender can make a loan based on the lower amount, but not on the greater. If the property is acceptable and the value high enough to grant the loan, the lender will continue processing the loan. The next step would be to qualify the applicant. Later, a loan committee reviews both the property and the applicant. The final approval of the property rests with the committee. FHA AND DVA PROPERTY STANDARDS
FHA and DVA requirements differ from most requirements for conventional loans. First let's discuss how the FHA and the DVA qualify property. The Federal Housing Administration and the Department of Veterans Affairs do not operate like conventional lenders; they insure or guarantee loans. They have minimum property standards that all properties have to meet. Beyond that, the FHA and the DVA
Dynasty School (www.dynastySchool.com) 12-17 REAL ESTATE FINANCE
have no specific property requirements. They do not adjust the loan–to–value ratio because of the property – if the property meets the minimum standards, it will be entitled to the maximum loan. Likewise, the interest rate is not affected by the property. Lenders' rates and points for FHA and DVA are entirely negotiable. QUALIFYING FOR FHA AND DVA
The primary responsibility of the FHA and the DVA is to ensure that a property meets their minimum property standards. In addition, they must establish a market value for the property. An FHA appraisal must be ordered through an approved FHA lender (commercial banks, savings banks, and most mortgage companies can be approved lenders). The lender orders an appraisal by filling out an FHA appraisal request form. On receipt of the request, the FHA will assign it to an FHA – qualified fee appraiser, an independent appraiser who works with lenders and the public. After the appraiser has inspected and...
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- Spring '10