real estate finance - full book (500 pgs)

This 22 equity must be shown by an official appraisal

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Unformatted text preview: loan amount. To keep it simple, if a home sold for $100,000 and the loan was 85% or $85,000, the coverage would be 12% of $85,000 = $10,200. The lender's exposure is $74,800, or 75 percent. Premiums – If annual premiums are utilized, the fee due at close of escrow would be about .29% of $85,000, or about $246, and monthly collections thereafter would be $20.54. If monthly premiums are utilized, there may be no advance collection at close of escrow, and the premiums based on .32% would be $22.67. • 2. Loans above 85 and up to 90% loan–to–value coverage – the insurance ordinarily covers the top 25% of the loan amount. If a home sold for $100,000 and the loan was 90% or $90,000, the coverage would be 25% of $90,000 = $22,500. Lender's exposure is $67,800 or 68 percent. • Premiums – If annual premiums are utilized, the fee due at close of escrow would be about .49% of $90,000, or about $441, and monthly collections thereafter would be $36.75. If monthly premiums are utilized, there may be no advance collection at close of escrow, and the premiums based on .52% would be $39. 3. Loans above 90 and up to 97% loan–to–value coverage – The insurance ordinarily covers the top 30% of the loan amount. If a home sold for $100,000 and the loan was 95% or $95,000, the coverage would be 30% of $95,000 = $28,500. Lender's exposure is $66,500 or 67 percent. • Premiums: If annual premiums are utilized, the fee due at close of escrow would be about .75% of $95,000, or about $712, and monthly collections thereafter would be $59.38. If monthly premiums are Dynasty School (www.dynastySchool.com) 6-21 REAL ESTATE FINANCE utilized, there may be no advance collection at close of escrow, and the premiums based on .78% would be $61.75. There are other variations of fees and annual premiums, as welt as plans whereby you can pay one fee at the time of closing and no annual premium. Whether premiums are paid on the basis of 1/12 of an annual premium or merely on a monthly premium...
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