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Why do lenders insist that the property be appraised before they will agree to finance the buyers purchase of the real estate?
Wiki User
∙ 9y ago
The lender must establish the value of the property before it makes a decision on whether to loan money for the purchase and how much it is willing to loan. The property is given as security for the loan. If the mortgagor defaults the lender can take possession of the property and sell it. Therefore it must confirm the condition of the property and its value.
Wiki User
∙ 9y ago
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Who are lenders and borrowers?
Lenders are the banks and finance companies who contract loans for the purchase of vehicles, homes, and other property. Borrowers are those who contract for the loans so they may purchase vehicles, homes, and other property. Although you did not ask, dealerships and realtors are those who act as the agents of the lenders to put borrowers in debt.
Does it cost money to use a Realtor?
a large portion of the purchase price will be financed using some sort of financial instrument or debt, such as a mortgage loan collateralized by the property itself. The amount of the purchase price financed by debt is referred to as leverage. The amount financed by the investor's own capital, through cash or other asset transfers, is referred to as equity. The ratio of leverage to total appraised value (often referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure of the risk an investor is taking by using leverage to finance the purchase of a property. Investors usually seek to decrease their equity requirements and increase their leverage, so that their return on investment (ROI) is maximized. Lenders and other financial institutions usually have minimum equity requirements for real estate investments they are being asked to finance, typically on the order of 20% of appraised value. Investors seeking low equity requirements may explore alternate financing arrangements as part of the purchase of a property (for instance, seller financing, seller subordination, private equity sources, etc.) If the property requires substantial repair, traditional lenders like banks will often not lend on a property and the investor may be required to borrow from a private lender utilizing a short term bridge loan like a hard money loan from a Hard money lender
What type of title insurance is requested by lenders?
A Lender will require a Lenders Title Insurance policy if they are extending credit on a property. The Lenders title insurance policy is based off of the Loan amount that the borrower receives. It will only protect the lenders interest in the property if a problem arises on title.
What distinguishes hard money lenders from other lenders?
Hard money lenders offer loans backed on property. They tend to be short term loans, but as they use the client's house as collateral they can cause the person to foreclose their property. Hard money lenders place a higher focus on the value of the collateral over the ability of the borrower to repay.
What lenders will refinance a house that is for sale?
Lenders will usually want to know the financial state of the buyers. Only in exceptional circumstances will a seller need to re-finance a house shortly before sale.
Who are lenders and borrowers?
Lenders are the banks and finance companies who contract loans for the purchase of vehicles, homes, and other property. Borrowers are those who contract for the loans so they may purchase vehicles, homes, and other property. Although you did not ask, dealerships and realtors are those who act as the agents of the lenders to put borrowers in debt.
Does it cost money to use a Realtor?
a large portion of the purchase price will be financed using some sort of financial instrument or debt, such as a mortgage loan collateralized by the property itself. The amount of the purchase price financed by debt is referred to as leverage. The amount financed by the investor's own capital, through cash or other asset transfers, is referred to as equity. The ratio of leverage to total appraised value (often referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure of the risk an investor is taking by using leverage to finance the purchase of a property. Investors usually seek to decrease their equity requirements and increase their leverage, so that their return on investment (ROI) is maximized. Lenders and other financial institutions usually have minimum equity requirements for real estate investments they are being asked to finance, typically on the order of 20% of appraised value. Investors seeking low equity requirements may explore alternate financing arrangements as part of the purchase of a property (for instance, seller financing, seller subordination, private equity sources, etc.) If the property requires substantial repair, traditional lenders like banks will often not lend on a property and the investor may be required to borrow from a private lender utilizing a short term bridge loan like a hard money loan from a Hard money lender
Can you refinance a home in an irrevocable trust?
You need to discuss that with your lender. Some lenders are reluctant to finance real property owned by a trust. It is permissible according to Fannie Mae underwriting guidelines.
How do you go about condemning a house?
Once you have the seller's information and you have the property information you need to talk to the city to see what encumbrances are on the property and what you will need to do to have them removed. Lenders normally will not lend on this type of property so you will need to work with unconventional lenders to purchase and repair the home. Once the repairs are complete and any encumbrances are removed you can refinance with conventional loans.
How can you get a loan against property that you own outright with no mortgage in Florida if you are here legally from the UK but have no social security number and want to start a business?
Contact a mortgage or lending professional. You would be classified as a "foreign national." There are many lenders and programs available to you that will finance the property, allowing you to use the funds as you wish or finance the business itself.
Where can one get airplane loans?
There are several lenders that with provided financing to purchase an airplane. These include Bank of America, Air Loan, US Aircraft Finance, Airplane Financing and Aircraft Financing Direct.
Are lenders obligated to require you to have flood insurance?
If you are located in a flood zone they are probably obligated to their shareholders and the other people they finance for to assure the stability of the company to make sure that you have flood insurance and property insurance.
What type of title insurance is requested by lenders?
A Lender will require a Lenders Title Insurance policy if they are extending credit on a property. The Lenders title insurance policy is based off of the Loan amount that the borrower receives. It will only protect the lenders interest in the property if a problem arises on title.
How good is equity lenders with finances?
Equity lenders are proffessionals when it comes to finance. They must by otherwise they would not be valid sources for consulting with customers who may have questions on the subject.
What are the types of finance primary market?
New securities by the borrower in return for cash from investors(or lenders).
What distinguishes hard money lenders from other lenders?
Hard money lenders offer loans backed on property. They tend to be short term loans, but as they use the client's house as collateral they can cause the person to foreclose their property. Hard money lenders place a higher focus on the value of the collateral over the ability of the borrower to repay.
Is vested interest on a property paid by the renter usable in the lenders eyes?
yes
