real estate finance - full book (500 pgs)

Li what does the application fee cover balloon

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Unformatted text preview: it is important, then, for you to check the conventional market on a continuing basis, for what was true last week may not be true this week. When dealing with the conventional mortgage, one thing must be kept in mind: because a client is rejected by one conventional lender does not mean that the client will be rejected by all of the conventional lenders. Each lender has its own set of rules for Dynasty School (www.dynastySchool.com) 15-19 REAL ESTATE FINANCE accepting or rejecting a loan application. This is not true for VA or FHA loans. If either the VA or the FHA rejects the application, there is usually little hope of getting the application approved by the other. In order to compare lenders, you have to know what items to look for. Here are some of the main items to check out and compare: Interest rate – The interest rate is the one item that immediately comes to mind when discussing differences between lenders. Interest rates frequently change for such reasons as demand, supply, risk, competition, and so on. There is no set pattern as to how often interest rates can change. They can change weekly or even daily. Interest rates also vary according to the type of property and loan–to–value ratio. For example, a 95% loan may command a higher rate than an 80% loan because of the higher risk. 5. Loan fees – The fee charged on loans is another item that each lender must determine. Loan fees on an 80% loan typically vary from 0 to 2% of the loan amount. Higher loan–to–value ratio loans (90 to 95 percent) carry higher loan fees. Most lenders offer tiered pricing, with points increasing as interest rates decrease. For instance, if borrowers want to secure a 7% rate, they may pay two points, while the points–sensitive borrower may pay zero points but accept an 8 to 9% interest rate. The type of property may also affect the loan fee. For example, a lender may decide to charge a higher loan fee on three– to four–unit dwellings as opposed to an owner–occupied single–family home. Loan–to–value ratio – Conventional lenders are able to make loans up to 95 per...
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