Government Real Estate Finance Programs Key Terms
Learn the terms associated with government real estate finance programsIf you need real estate assistance, you may qualify for one of thousands of government real estate finance programs. Options vary from those first-time homebuyers programs to a veteran needing down-payment assistance or a single mother starting her own business. Wading through the requirements and all of the information can seem tedious and complex. And not just any loan officer can assist you with a government real estate finance program. Learn these key terms to help get you on your way to securing a government loan.
U.S. Small Business Administration uses a Basic 7(a) loan program with guaranteed service.
Surety bondsA surety bond is a bond issued to an entity, guaranteeing the fulfillment of financial obligation to a third party. The third party can recover losses through the bond, if the entity defaults.
Loan modificationIf a borrower is facing a long-term inability to pay back the loan, the lender may make a loan modification. A loan modification can involve decreasing the interest rate, extending the loan's term period or the issuance of a different type of loan. Lenders are usually willing to modify the loan instead of going into default.
Federal Deposit Insurance Corporation's loan modification program.
RefinanceThe most common example of a loan modification is the process of refinancing a mortgage. Refinancing is basically using the same property and paying off an existing loan with a new loan, usually with different terms. To make it worthwhile, the savings in interest must outweigh refinancing fees. Reasons to refinance include reducing the term period, gaining a lower interest rate or switching between an adjustable to a fixed rate or vice versa.
Certificate of eligibilityA certificate of eligibility is a document that a government agency issues to recognize the individual as eligible for government assistance. The Veterans Administration uses this term in certifying a veteran's application for a loan.
Full documentationWhen a loan program requires full documentation, it means you must show your income through W-2, 1099 forms or your tax return. Some lenders using full doc loans require two years' worth of information. Other lenders definition of full doc may vary depending on the loan type.
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