I exception loan secured by asset other than home

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I Exception: loan secured by asset (other than home being purchased) Affordable housing programs more flexible about borrowed funds. Bank accounts
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Assets If applicant selling another property to raise cash, net equity in property can count as liquid asset. Net Equity = Market Value – ( Liens + Selling Expenses ) Real estate for sale
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Assets If equity is main source of money for purchase of new home, lender won’t fund loan until old home sold. I Copy of settlement statement usually required as verification. Real estate for sale
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Assets If equity is main source of money for purchase of new home, lender won’t fund loan until old home sold. I Copy of settlement statement usually required as verification. If new home ready to close before old home sold, buyers may apply for swing loan . Real estate for sale
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Assets Some applicants own real estate they aren’t planning on selling. Should be listed as asset in loan application. I But only equity contributes to net worth. Other real estate
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Net Worth Applicant’s personal liabilities are subtracted from total value of assets to calculate net worth. Liabilities include: credit card and charge account balances installment debts taxes owed liens against real estate owned Liabilities
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Net Worth Rules regarding gift funds usually limit how much of downpayment and closing costs may be covered by gift funds. I Borrower must invest some of her own funds. Gift funds
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Net Worth Rules regarding gift funds usually limit how much of downpayment and closing costs may be covered by gift funds. I Borrower must invest some of her own funds. Donor must sign letter stating that the gift funds don’t have to be repaid. Funds must be deposited into applicant’s bank account for verification. Gift funds
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Other Factors in Underwriting Type of loan (fixed-rate, adjustable-rate, partially amortized, etc.) affects underwriting. Borrowers default more on ARMs and other loans that involve changes in payment amount. Loan type
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Other Factors in Underwriting Length of repayment period affects size of monthly payment. Shorter repayment period, larger payment. I More difficult to qualify for larger payment. Repayment period
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Other Factors in Underwriting Length of repayment period affects size of monthly payment. Shorter repayment period, larger payment. I More difficult to qualify for larger payment. But lender may be slightly more inclined to approve loan with shorter repayment period. I Lender’s funds are tied up for less time. Repayment period
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Other Factors in Underwriting Investor loans have much higher default rate than loans to owner-occupants. Because of additional risk, investor loans are subject to stricter LTV requirements, additional fees, and higher interest rates. Owner-occupancy
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Other Factors in Underwriting Regular single-family homes appreciate much more, and more reliably, than: manufactured homes condominium units some other types of residential property Nontraditional property type is treated as additional risk factor in underwriting.
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