real estate finance - full book (500 pgs)

This reduction is accomplished by the use of an

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Unformatted text preview: loans with attractive provisions. Some may offer what is called the “Quick Qualifier” loan, requiring not much more than pay stubs to satisfy the verification requirements for loans with a large down payment. But even with very large down payments, the borrowers' credit is always checked. More lenders available – If you apply for a DVA–guaranteed loan and the loan is rejected by the DVA, you have no alternative lender. There is only one U.S. Department of Veterans Affairs, just as there is only a single FHA and one California Department of Veterans Affairs. On the other hand, if a loan is turned down by one conventional lender, there are other lenders who may approve the loan. No one conventional lender has a monopoly on the market: With different lenders come different underwriters and different attitudes, so that even though they are applying the same rules, results may differ due to compensating factors. Less red tape – Processing a conventional loan involves less red tape. There may be fewer forms to complete, and the routine of processing is more flexible. DISADVANTAGES OF CONVENTIONAL LOANS Higher down payments – The down payment required on the conventional loan is more than that required on either the FHA or VA loan. Most buyers use government–backed financing because it usually requires a smaller down payment than conventional loans. DVA loans do not require any down payment (although a lender may require a down payment if there is a differential between sales price and appraisal); FHA and Cal–Vet require small down payments. However, during easy money 6-12 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 6: HARD MONEY LOAN & CONVENTIONAL LOANS markets, conventional loans with 3 to 10% down payments come close to competing with government loans for low down payments. Prepayment penalties – FHA, DVA, and Cal–Vet loans do not have a prepayment penalty. Some conventional loans have them, but they...
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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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