real estate finance - full book (500 pgs)

There are three gpm plans available to the

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Unformatted text preview: 2 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 5: GOVERNMENT PARTICIPATION & BACKED LOANS Title X – To finance the purchase of new land and the development of improved building sites or to finance the development of new communities in amounts up to $25 million for any one project. Repayment periods may not exceed 10 years. Title Xl – To finance a program providing group practice medical facilities for preventive, diagnostic and treatment services to ambulatory patients with mortgages up to $5 million with terms up to 25 years. The most commonly encountered are Sections 203(b) and 245 described here. SECTION 203(B) Under the 203(b) program: 1. 2. 3. 4. Anyone 18 and over is eligible. Loans are available on properties of from one to four units. U.S. citizenship is not required; resident aliens are eligible. The FHA establishes a range of maximum loan amounts for one–to four– unit dwellings that vary according to area. For example, the California maximum loan on a single–family dwelling is $261,609. The cost of housing in a particular area determines the maximum loan amount, which is adjusted periodically to keep up with property values. Figure 5-1: Freddie Mac Maximum Loan Amounts In High–Cost Areas (2002) No. of Units 1 2 3 4 Loan Amount $261,609 334,863 404,724 502,990 SECTION 245 – GRADUATED PAYMENT MORTGAGE (GPM) GPM is a mortgage where the early payments are low and rise over a period of time. It should be noted that the early payments of a GPM are not sufficient to cover the amount needed to amortize the loan fully, so the homeowner is borrowing additional Dynasty School (www.dynastySchool.com) 5-33 REAL ESTATE FINANCE monies that are added to the principal balance to be paid back in the future. To state this another way, it is said that the GPM for the first few years is in negative amortization. Persons applying for the GPM must be aware that the monthly payments to principal and interest will increase each year for the...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

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