RE25RC08: Financing

A Description of Financing

RE25RC08: Financing

This course is designed for real estate brokers and salespersons and provides a comprehensive overview of the application, procedures and mentality regarding mortgage financing in general.

I. LOAN ORIGINATION - From initiation of process until disbursement of funds

A. Statute of Frauds requires only writings are enforceable

B. Loan originator includes all lenders and mortgage brokers

C. Mortgage lender versus mortgage broker

D. Lender mentality - What lenders are looking for?

II. PRIMARY LOAN APPLICATION

A. Credit report/credit score is first step

B. Significance of FICO score (as opposed to other credit score programs)

C. Survey of market (e.g. rates, terms and special programs)

D. Pros and cons of mortgage brokers.

E. Initial application

F. Final submission

III. LOAN PACKAGE/APPLICATION

A. Concept of project/overview

B. Market studies to justify pro forma revenue

C. Site analysis

D. Construction or improvement plan

E. Project cost analysis

F. Management plan

G. Operating cost analysis

H. Cash flow analysis

I. Lease terms analysis

J. Loan request analysis

IV. TYPE OF LOAN

A. Short term versus long term loans

B. Conventional loan

C. Direct Reduction loan

D. Blanket Loan

E. Package Loan

F. Straight loan

G. Construction/Interim loan versus Permanent/End Loan

H. Purchase money mortgage

I. Balloon payment loan

J. Wraparound loan

K. Adjustable rate mortgage loan (ARM)

L. Private mortgage insurance

M. Soft second mortgage

N. VA versus FHA loans

O. Home equity loan (HELOC)

V. TERMS OF LOAN

A. Loan to value ratio (LTV)

B. Prime rate and other benchmarks

C. Loan term

D. Taxes/ Insurance

E. Assumption/Assignment

F. Exculpatory provisions

G. Partial release provisions

H. Appraisal

I. Due on sale clause - The real meaning

VI. DISBURSEMENT OF FUNDS/CLOSING

A. Attorneys role

B. Municipal lien certificate

C. Title insurance

D. Real Estate transfer tax/stamps

E. Settlement

F. Junior financing

G. Payoff letter

H. Satisfaction of mortgage

VII. SOURCES OF FINANCING - PRIMARY MARKET

A. Commercial and savings banks

B. Credit unions

C. Mortgage brokers

D. Mortgage bankers

E. Life Insurance companies

F. Pension funds

G. REIT's

H. Community financing

I. Owner financing

J. Equity financing

K. Trusts

L. Joint ventures

M. Sale and leaseback

VIII. ONE TO FOUR DWELLING UNIT OWNER OCCUPIED RESIDENTIAL

A. Attorney for mortgagee disclosure

B. Appraisal availability for mortgagor

C. When one-four owner occupied the mortgage originator must be licensed

D. Identification of mortgage broker

 

Statutes and Regulations

  • M.G.L. c. 259, § 1
  • M.G.L. c. 184, §§ 17B, 17C
  • M.G.L. c. 183, §§ 54, 54D
  • M.G.L. c. 183, §§ 54, 55
  • M.G.L. c. 255, § 1
  • M.G.L. c. 255F
  • M.G.L. c. 183, § 6D

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