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Unformatted text preview: next 5 years depending upon which of the GPM plans is selected. Applicants should also be aware that over the life of the mortgage, they will pay more interest than if they had secured a level–payment loan. Finally, any persons who will use the GPM must be made aware that they will have to make a larger down payment than those required under Section 203(b) or a level–term mortgage. There are three GPM plans available to the prospective homebuyer. The three basic GPM plans vary the rate of the annual monthly payment increase from 2 percent per year to 7.5 percent per year. The following will give the percent of increase and the number of years of increase for each plan: Plan I – The payment will increase at the rate of 2.5 percent per year for 5 years. Plan II – The payment will increase at the rate of 5 percent per year for 5 years. Plan Ill – The payment will increase at the rate of 7.5 percent per year for 5 years. It is important to note that the monthly payments only increase yearly, not monthly, and that at the end of the fifth year the payments are level and are higher than those of a level or straight amortized mortgage. The reason for the higher payment, as stated previously, is that the homeowner has been in negative amortization and is now starting to repay the funds borrowed. The GPM has the same term as mortgages insured under Section 203(b), that is, up to a maximum of 30 years. The maximum loan amount under Section 245(a) is the same as 203(b). thus it is set area–by–area. 5-34 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 5: GOVERNMENT PARTICIPATION & BACKED LOANS DEPARTMENT OF VETERANS AFFAIRS
The U.S. Veterans Bureau was founded in 1916 to assist needy veterans of the Civil War and Spanish American War. Its name changed to the Veterans Administration in 1930, then again in 1989, when it was elevated to cabinet level with the designation Department of Veterans Affairs. The DVA is not usually a direct lender, but guarantees the lender against partial loss caused by default of a veteran borrower on a loan for a home (1 to 4 units), mobilehome with or without site, or a condominium or other cooperative unit. PROCEDURE
These loans are administered by the U.S. Department of Veterans Affairs, formerly the Veterans Administration. A DVA appraiser estimates value and issues a “Certificate of Reasonable Value” (CRV). The loan is then made by an ap...
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- Spring '10