CA_Principles_10[1]

CA_Principles_10[1] - 1 Lesson 10: Applying for a...

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Unformatted text preview: 1 Lesson 10: Applying for a Residential Loan Principles of California Real Estate Applying for a Residential Loan This lesson will cover five topics: & choosing a lender & loan application and underwriting & basic loan features & residential financing programs & predatory lending Choosing a Lender Types of mortgage lenders Most home buyers finance their purchase with a loan from: & savings and loans & commercial banks & savings banks & credit unions & mortgage companies 2 Choosing a Lender Types of mortgage lenders At one time, financial institutions in US were quite specializedeach type of business had its own kind of services and types of loans. That kind of specialization is no longer true; most depository institutions are now financial supermarkets offering many products, including residential mortgage loans. Choosing a Lender Types of mortgage lenders Another change in the industry is that banks no longer dominate residential financing. & A home buyer is just as likely to get a loan from a private mortgage company as from a bank. Choosing a Lender Types of mortgage lenders Although there are differences in the ways lenders are regulated, most loan applicants choose a lender because of loan features , interest rates and services (not because the lender is a savings and loan or mortgage company). Even so, agents should be aware of the differences between mortgage lenders. 3 Types of Mortgage Lenders Savings and loans Savings and loans : & emphasize home purchase loans & most loan funds come from customer savings deposits & chartered by federal or state government (authorized to do business) Types of Mortgage Lenders Commercial banks Commercial banks : & national bank (chartered by federal government) or state bank (state charter) & traditionally made short-term business loans but later diversified business & now have large share of residential finance market Types of Mortgage Lenders Savings banks Savings banks : & focused on small depositors and serving local community (mutual savings banks) & can be organized as mutual company or stock company & residential mortgages still big part of their business 4 Types of Mortgage Lenders Credit unions Credit unions : & serve members of a particular group (e.g. union, school, professional association or company employees) & began with small personal loans, but have moved in to home equity loans and home purchase loans Types of Mortgage Lenders Mortgage companies Mortgage companies : & not depository institutions (unlike banks, credit unions, etc.) & act as loan correspondent : intermediary between large investors and home buyer looking for financing) Types of Mortgage Lenders Mortgage companies Loan correspondents lend investor funds to borrowers and then service the loans (collecting loan payments for investors) in exchange for servicing fees....
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CA_Principles_10[1] - 1 Lesson 10: Applying for a...

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