Chapter 11 - Loans, notes, taking over seller's loan Flashcards
3 types of loans
conventional loan
FHA Loan (federal housing administration)
VA loans
Conventional loan
- who is eligible
- max loan amount
- is there gov’t support, insurance or guarantee?
- What about pre-payment penalty?
- alienation clause?
- How much down OR what is needed
Conventional Loan
- anyone is eligible
- no max loan amount
- no gov’t support, insurance or guarantee
- can have prepayment penalty and alienation clause
- 20% down or need PMI (private mortgage insurance)
FHA Loan
- who supports it
- do they make the loan or do you obtain through lender
- is there a max amount
- are they assumable (alienation clause)
- is there a pre-payment penalty
- who is eligible
FHA
- gov’t supports it, HUD insures it (MIP or PMI acts as insurance company)
- FHA doesn’t make loan, you obtain one through an approved lender
- Low down payment (3-5%)
- There is a max loan amount
- NO ALIENATION CLAUSES, they are assumable
- No pre-payment penalty allowed
- anyone is eligible
VA Loans
- guaranteed by who
- down payment?
- assumable?
- pre-payment penalty?
- who makes the loans?
- what is ‘certificate of eligibility’
- how many loans can one get?
- do widows/ers qualify?
- CRV?
- guaranteed by gov’t
- no down payment required
- assumable by anyone
- no prepayment penalty
- VA can make loan, or they can be done thorugh lender
- Certificate of Eligibility - document to say how much can be loaned
- Vet can get any # of loans as long as previous are paid off
- Widows can qualify as long as they don’t remarry
- CRV - Certificate of reasonable value - appraisal of property’s value
Speical notes
All 3 types of loans - lender wil lend based on ______ value OR _____ price
Whichever is _____
appraised value OR sales prices
Whichever is less
Who can pay points on all three loans
anyone
Interest rates and payments are negotiable on all three
T or F
True
Most lenders require the borrower to carry home owner’s insurance that covers AT LEAST the original home loan amount
T or F
True
FhMA
farmers home administration
for small communities
only on certain price range hones
borrower can make more than certain amount for income
how can buyer take over seller’s loan
1) assumption
2) subject to
assumption
buyer takes over payments and primary liability - seller remains secondarily liable
both buyer and seller are liaable
novation
writing of a new contract
subject to
buyer tkaes over paymetns and is only liable to seller
seller is liable to lender
Primary Mortgage market
where consumers get loans
Primary Lenders
banks (commercial)
Savings and loan instiutions
Credit unions
*some insurance comapnies
