|FHA/FNMA/FHLMC/stateHDA approval||<– Date –> <– Thread –>|
|From: biow (biowcs.UMD.EDU)|
|Date: Sat, 11 Jun 94 15:38 CDT|
In response to the question about pursuing various types of housing approval, I can only say that it's probably well worth it. Without this sort of approval, financing is only available only from a small, not-very-competitive market, called the "portfolio" or "investor" market. FHA and stateHDA (bond issue) property value and income limits may make either or both inapplicable for your development. But FNMA approval is pretty much a must. A few years from now, in hard economic times or more strict financial system regulation, there may not be *any* portfolio loans out there. Are you ready to provide your own financing to a future buyer? Why else is it important to be able to get loans from a highly competitive market? Because otherwise you will not only have more trouble selling your home later (far fewer people will be able to qualify for loans), but you will get screwed right now. Yes, that nice, friendly community bank will nail you to the wall, and you won't even realize how badly you've been screwed. How do I know this? Because I've been a loan officer and know how it's done. It's called "overage," and amounts to a loan officer's unilateral markup on your loan, as some combination of greater rates or points. If you are on the highly competitive "conforming" or "jumbo" markets, you can do okay by calling around town for rates and going with a low (but not suspiciously low) rate. Call on the same day you intend to apply and lock in the rate, or else you'll get lied to (honest loan officers will simply refuse to give you a rate). But if you're a special case, with only one or a few portfolio lenders out there, you are without defenses. There are a dozen ways for you to get taken for as much as three points of "overage" without your even knowing it happened. Is there an FHA/FNMA requirement that you don't like? Consider whether it's worth the cost and risk (use perhaps 5% of your property value as an estimate) of going portfolio. Those annoying requirements are, for the most part, written in red [ink] from past bad experiences. If financial instituitions and the government won't risk their money without termite proofing, do you want to? Chris Biow
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