Imperial Valley press., 1930-07-07
Financing Methods
h For Builders Who
k Must Borrow Funds
BY the Architects Small
House Service Bureau Of the
United States, Inc.

IL IIouSC SCINbtC Va tiiS
United States, Inc.
/ Families who can supply cash fol
so per cent or more of their home
costs generally experience little
difficulty in obtaining the extra
money needed by placing first
mortgage on the property acquired
Their problem is often merely 6
question of choosing the agency
which offers the most satisfactory
service and terms.
The building and loan association
is an important financing source
tor this group, as these organiZa'
tions often lend more than half the
property value.
Another source Of funds is the
life insurance company. Their
loans are placed through local
agents - banks, trust companies
mortgage companies and individ-
Uals trained in the work. These
agents are permitted to accept ap-
plications only in connection with
properties located in developed sec
tons where values are stabilized.
Loans are.not generally made on
houses on an uninproved street or
where property does not sell readily
Appraisal Methods Vary
The agent investigates the risk
and appraises the property. Ills
appraisal is invariably conserva-
tive. and the home in question is
often valued for loan purposes at a
figure somewhat lower than the
purchase price.
Because of their appraisal meth
ods-and these vary with the differ
ent companies-the loans CT the
more cons vative companies,
though made up to so per cent OF
valuation, seldom represent more
than so or 55 per cent OF the pur-
chase price of the property.
Insurance company loans run for
periods as long as Is years. Inter
est is at the rate prevailing in the
locality where the loan is made, and
is usually payable semi-annually.
In many cases it IS required that
the principal be curtailed regular
iy on interest dates. Some COM
panies make life insurance policy
part of the mortgage agreements.
4 loan from this source has i'm
portant advantages: 1t is made for
q period long enough to enable the
borrower to repay it without the
necessity of renewing with the at
tendant inconvenience and expense
Of this process. Amortization, or
Gradual repayment OF the princi-
pal being provided for, interest
charges are reduced and the bor-
rover encouraged to get out of debt
Savings Bank Loans
A third lending agency. which
often lends somewhat more than
the insurance company, is the saw
ings bank In making real estate
joans, savings banks are generally
restricted by state laws which fix
The maximum percentage Of prop,
arty value that they may lend
These laws, however, do not neces-
sarily determine the banks lend.
ing policy, whether it shall be
liberal or conservative.
Savings bank loans are frequent
Iy made for short terms, and are
Tepayable in full at the end of the
terms. Many, however, are now
making long term loans which are
repayable in installments similar tc
those of building and loan associa
tions, and of some Of the life in
surance companies.
Mortgage companies are an i'm
portant factor in home financing
in the larger communities. Unlike
the other sources mentioned, these
companies often devote a large per
centage of their funds to construc
tion loans. Their loans are made
for both short and long terms ahc
on the amortized or straight basis
Copyright 1929. The Architects
Small House Service Bureau OF tht
United States, 1ac,