Posted on: 21st Aug, 2007 07:45 am
Why do some contruction loan programs require you to have owned your land for twelve months in order to use it as equity?
This is called seasoning. Its to prevent selling and reselling the land inflating the value of the lot. The bank is making sure that you are not inflating the land value and your intention is to build a house and not make away with the $$.
Yes one common way which is used to try and stop mortgage fraud.
I'm sorry but I still don't quite understand. How does reselling the land inflate the value? I thought normally there was an independent appraisal performed by an appraiser chosen by the lender. Thanks
"Why do some contruction loan programs require you to have owned your land for twelve months in order to use it as equity?"
Fannie Mae has this rule to stop several refinances in a year to take advantage of dropping interest rates. Re-refinancing has created problems in the bond market, the reason for that is consumers continue to shop for better deals and average length of home loans have dropped to less than 18 months. These loans are bundled together and sold as income producing securities by Fannie Mae. When someone buys a 10 yr security, it messes things up to have it turn over in 18 months time.
Fannie Mae has this rule to stop several refinances in a year to take advantage of dropping interest rates. Re-refinancing has created problems in the bond market, the reason for that is consumers continue to shop for better deals and average length of home loans have dropped to less than 18 months. These loans are bundled together and sold as income producing securities by Fannie Mae. When someone buys a 10 yr security, it messes things up to have it turn over in 18 months time.
Hi Dingoamb,
The process of reselling a real estate property considerably at a higher price than its original value is possibly done by the buyer to make a profit. This concept of reselling is known as flipping. This type of property flipping is considered as a fraud because it is artificially inflating the property value by reselling it within a short time after making slight improvement towards it.
As a result of flipping, the cost of living at such property is rising considerably. Thus it is forcing the people to relocate to some different places.
The process of reselling a real estate property considerably at a higher price than its original value is possibly done by the buyer to make a profit. This concept of reselling is known as flipping. This type of property flipping is considered as a fraud because it is artificially inflating the property value by reselling it within a short time after making slight improvement towards it.
As a result of flipping, the cost of living at such property is rising considerably. Thus it is forcing the people to relocate to some different places.