Discussion Ch. 11 and 12
Viridiana
Bre 126
March 15, 2024
Huber, W.
Overview
Chapter 11 discusses the differences between government programs such as VA and FHA loans. To be eligible for these loans, a buyer must meet specific requirements. Chapter 12 discusses land contracts and mortgages. In the following text, I will discuss these chapters further.
Key Concept from Chapter 11
In Chapter 11, I learned that FHA loans give more people the opportunity to purchase a home, which was not accessible before Congress created them. FHA loans ensure that lenders are covered in case of non-payment by the borrower. As the insurer, the FHA incurs full liability for losses resulting from default and property foreclosure. In turn, the FHA regulates many of the terms and conditions of the loan. FHA regulations have the force and effect of law (Huber, 292).
Key Concept from Chapter 12
I learned that a wraparound mortgage is when the seller acts as the lender, collecting payments from the buyer. By using a wraparound installment mortgage sales contract, the seller can pass on the benefit of an existing loan at lower-than-market interest rates, even if the buyer is unwilling or unable to directly assume the loan. Thewrap is sometimes used to get around the provisions of an alienation clause (which limits the ability to assume a loan) (Huber, p. 313).
Key Concept from Chapter 12
A land contract is similar to a mortgage, but instead of involving a lender, it involves the owner and the buyer. The buyer will only take possession of the land when all payments have been made. In its simplest form, the land contract is made by a seller who owns the property free and clear. Such a seller need only negotiate the term and interest rate of the contract, along with the amount of down payment, if any (p. 316).
Summary
by Viridiana Zepeda
Financing a mortgage can be complicated and stressful for all parties involved. However, becoming familiar with all loan options can make things easier. Clients will also benefit from the advice of a knowledgeable agent during the financing process, which can help ease some of the stress associated with this large purchase.
