Download - BREAK - Basic Real Estate - A Knowledge
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What information you need to know when starting selling Real Estate Properties?
BASIC REAL ESTATE -A KNOWLEDGE
(BREAK)
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A Seller of a product must have a basic knowledge of the product he /
she has to sell.
INTRODUCTION
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BREAK away to the traditional way of just referring a client to close
your deals.
INTRODUCTION
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BREAK away to the notion that you can be rich just by referring and not knowing anything about the product
you are selling.
INTRODUCTION
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Explaining the intricacies of Real Estate Financing
FINANCING 101
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UNDERSTANDING HOME LOANS
Equity/DP
Balance / LA
TCP= TSP + MF
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TSP Stands for Total Selling Price Selling Price of the Property only
MF Stands for Miscellaneous Fees Included are:
Title Transfer Fees and Taxes Notarial Fees Documentation
TCP Stands for Total Contract Price Price of the Property plus Miscellaneous fees
UNDERSTANDING HOME LOANS
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Remember the formula:
UNDERSTANDING HOME LOANS
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Equity / DP Initial amount the client should pay the Developer as proof of his ownership of the unit.
DP stands for Down Payment Balance / LA
Amount to be loaned to the financing institutions for the Developer to receive the whole amount.
LA stands for Loanable Amount
UNDERSTANDING HOME LOANS
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QUESTION: How do you compute for MA?
UNDERSTANDING HOME LOANS
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MA Stands for Monthly Amortization
LA Stands for Loanable Amount
FR Stands for Factor Rate You can find Factor Rates table online Factor Rates are dependent on interest rate so it is essential to determine the possible interest rate of financing institutions
UNDERSTANDING HOME LOANS
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Remember the formula:
UNDERSTANDING HOME LOANS
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QUESTION: Is there a better way of computing for the MA?
UNDERSTANDING HOME LOANS
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Yes there is another easier way.
If you have a mobile device such as a mobile phone with android or iOS operating system, just download and install “Financial Calculator”
UNDERSTANDING HOME LOANS
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Just input the following information: Loanable Amount Interest Rate Term (How many years the client intend to pay)
Hit CALCULATE
UNDERSTANDING HOME LOANS
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QUESTION: Can the Equity / DP be divided for easier terms?
UNDERSTANDING HOME LOANS
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- Yes, it can be divided to terms.- The terms will be dictated by Developers.
UNDERSTANDING HOME LOANS
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QUESTION: Why do we have to divide the Total Contract Price to
two (2), Equity and Loanable Amount? Why not approve the whole
Total Contract Price?
UNDERSTANDING HOME LOANS
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- Financing Institutions should know if a client is CAPABLE of getting a loan.
UNDERSTANDING HOME LOANS
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- Down payment or equity serves as a proof of their CAPABILITY to get a loan.
UNDERSTANDING HOME LOANS
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- Equity also serves as security payment to Developers.
UNDERSTANDING HOME LOANS
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QUESTION: What are the instances that you will be disapproved by
banks?
UNDERSTANDING HOME LOANS
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1. If the client have previous credit card / loan problems not solved.
UNDERSTANDING HOME LOANS
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2. Incorrect document information like residency, birthdate, civil status or other info that is critical to national security.
UNDERSTANDING HOME LOANS
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3. Fake and illegal requirements and documents submitted.
UNDERSTANDING HOME LOANS
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4. Client Income is below the required Income of the bank.
UNDERSTANDING HOME LOANS
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QUESTION: How much salary do the banks require for home loans?
UNDERSTANDING HOME LOANS
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Remember the formula:
UNDERSTANDING HOME LOANS
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MA Stands for Monthly Amortization The amount the client is willing to pay monthly to the bank
0.3 Or 30% in numerical terms 0.3 is the percentage of the income where amortization will fit
UNDERSTANDING HOME LOANS
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Required Gross Income This is the whole income of the individual or family, including all taxes and monthly contributions to other organizations
UNDERSTANDING HOME LOANS
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QUESTION: How much salary do PagIBIG / HDMF require for home
loans?
UNDERSTANDING HOME LOANS
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Remember the formula:
UNDERSTANDING HOME LOANS
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MA Stands for Monthly Amortization The amount the client is willing to pay monthly to PagIBIG financing institution.
0.4 Or 40% in numerical terms 0.4 is the percentage of the income where amortization will fit
UNDERSTANDING HOME LOANS
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HDMF Stands for Home Development Mutual Fund
PagIBIG Stands for Pagtutulungan sa Kinabukasan, Ikaw, Bangko, Industriya at Gobyerno
Remember these terminologies as it sometimes being used as contest questions and being asked by clients unwittingly.
UNDERSTANDING HOME LOANS
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Required Net Income This is the take home income of the individual or family, less all taxes and monthly contributions to other organizations.
UNDERSTANDING HOME LOANS
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QUESTION: What are the usual Home Loan
Financing Institutions?
UNDERSTANDING HOME LOANS
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1. PagIBIG / HDMF2. Bank3. In-House
UNDERSTANDING HOME LOANS
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PagIBIG Stands for Pagtutulungan sa
Kaunlaran, Ikaw, Bangko, Industriya at Gobyerno
HDMF Stands for Home Development Mutual
Fund In-House Financing Institution of the Developer
UNDERSTANDING HOME LOANS
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QUESTION: What are the differences between this Financing Institutions?
UNDERSTANDING HOME LOANS
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They differ in the following: Approval time of Home Loan Interest Rates Requirements needed to complete
Home Loan Available length of the term of Home
Loan
UNDERSTANDING HOME LOANS
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QUESTION: What do they mean if they said 20-80? Or 10-90? Or 5-15-
80?
UNDERSTANDING HOME LOANS
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- It means the percentage of Down Payment as against to the Loanable Amount
UNDERSTANDING HOME LOANS
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- In Real Estate jargon, 20-80 means 20% DP, 80% LA.
- 10-90 means 10% DP, 90% LA.- 5-15-80 means 5% Spot DP, 15% Staggered DP, 80% LA
UNDERSTANDING HOME LOANS
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- There are different financing terms the Developer offers.
- Just study them and ask.
UNDERSTANDING HOME LOANS
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QUESTION: Are there really hidden charges as other people often ask?
UNDERSTANDING HOME LOANS
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- Hidden Charges are usually the Miscellaneous Fees (MF) which the Developers do not include in the marketing computations for persuasion purposes.
UNDERSTANDING HOME LOANS
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- Just remember that Move-In Fees are really not included in TCP. The client is the one to register this including the payment but it is very minimal compared to MF.
UNDERSTANDING HOME LOANS
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Know the words used in Real Estate
TERMINOLOGIES
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Leasehold Ownership Lot owner/s are
DIFFERENT as the Developer.
There may be a chance that the client/s (or children) will use the unit/s until the lease term expires.
Perpetual Ownership Lot owner/s are the
SAME as the Developer. There is no expiration
for the usage of the unit/s.
Homeowners Association as a whole will vote what they want to do about the structure.
WORDS TO REMEMBER
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QUESTION: Is it really true that a building is only for 50 years?
WORDS TO REMEMBER
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- According to a Civil engineering colleague, structures often go beyond 50 years. It is just a myth that Buildings will be destroyed after 50 years.
WORDS TO REMEMBER
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- What ends after 50 years is the Homeowners Association because companies and organizations lasts only until 50 years but renewable after.
WORDS TO REMEMBER
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- Homeowners Association just have to check the structural integrity from time to time for the safety of all the residents.
WORDS TO REMEMBER
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QUESTION: What is the difference between finished / fitted and
furnished?
WORDS TO REMEMBER
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Finished / Fitted Finished or Fitted
unit/s mean that the unit/s have: Wall Paint Ceiling Tiles Cabinets
Furnished Already finished or
fitted plus the added furniture are included in the turnover.
WORDS TO REMEMBER
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QUESTION: What is Rent-to-Own?
WORDS TO REMEMBER
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It is a program of Developers wherein a unit/s can be yours just by paying on a monthly basis
WORDS TO REMEMBER
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Rent = Monthly Amortization Own = Down Payment + Financing Approval
WORDS TO REMEMBER
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QUESTION: How do I determine the edges of the property especially in lots?
WORDS TO REMEMBER
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Cornerstone / Muhon is used in determining the edges enclosed by the property or lot.
WORDS TO REMEMBER
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QUESTION: What is the difference between Preselling and RFO?
WORDS TO REMEMBER
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NRFO / Preselling NRFO stands for
Not Ready For Occupancy
Unit/s that are not yet constructed and turned over
RFO RFO stands for
Ready For Occupancy
Unit/s that are already constructed
WORDS TO REMEMBER
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QUESTION: Can NRFO / Preselling units be also under Rent-to-Own
program?
WORDS TO REMEMBER
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Yes, the difference is that Preselling is not yet constructed so clients will not be able to move-in and use the unit/s yet.
WORDS TO REMEMBER
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Rent will mean payment of monthly down payment and amortization while Own will mean the finishing of construction, paying the down payment in full and approval of financing institution to the home loan.
WORDS TO REMEMBER
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QUESTION: What is the difference between a low-rise, mid-rise and
high-rise building?
WORDS TO REMEMBER
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Low-rise buildings are structures of up to three (3) floors / storeys high.
WORDS TO REMEMBER
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Mid-rise buildings are structures from four (4) storeys to twelve (12) storeys high.
WORDS TO REMEMBER
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High-rise buildings are structures from thirteen (13) storeys and above.
WORDS TO REMEMBER
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Know the requirements in every transaction
DOCUMENTS
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QUESTION: If you’re in the shoes of the client, what should you look for
to know that the project safe?
REQUIREMENTS
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Look for the LTS of the project. Look for the company’s track record
online.
REQUIREMENTS
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QUESTION: What is LTS?
REQUIREMENTS
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LTS Stands for License to Sell This is a license issued by HLURB to Developers before they can start selling Real Estate Properties to the public as protection to buyers.
REQUIREMENTS
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QUESTION: What is HLURB? What do they do and their mandate?
REQUIREMENTS
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HLURB Stands for Housing and Land Use Regulatory Board
The lead agency in the provision of technical assistance to local government units in the preparation of comprehensive land use plans;
REQUIREMENTS
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HLURB Stands for Housing and Land Use Regulatory Board
Regulation of housing, land development and homeowners association;
REQUIREMENTS
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HLURB Stands for Housing and Land Use Regulatory Board
Adjudications of disputes related thereto, is committed to deliver its services with competence and integrity in order to satisfy its stakeholder.
REQUIREMENTS
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Remember the 3 requirement categories in home loans: Proof of Identification Proof of Billing Proof of Income
REQUIREMENTS
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QUESTION: What are the Proof of Identification?
REQUIREMENTS
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Usually, these are 2 valid Government Id’s
Government issued Id’s are: Driver’s license PRC license SSS Id Tax Identification Number Id Voter’s Id Passport Company provided Id
REQUIREMENTS
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QUESTION: What if the client is working abroad?
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Process OFWs will look for a representative here in the Philippines to look after their documents.
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OFW Stands for Overseas Filipino Workers
Principal The person who is working abroad
AIF Stands for Attorney-In-Fact The person who shall be the representative by the OFWs.
SPA Stands for Special Power of Attorney Document made to make AIF the legal representative of the Principal abroad.
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QUESTION: What are the Proof of Billing?
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These are billing documents sent to clients on a monthly or regular basis.
These billing documents may be as follows: Electric billing Water billing Landline billing Post-paid Line billing
Credit card billing document may not be accepted by Developers or financing institutions so ask first if applicable
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QUESTION: What if the client is just renting in their present address,
what would be their proof of billing?
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Their proof of billing will be the landlord’s billing documents plus the authorization of the landlord that he / she approves of using his / her billing document as proof of billing.
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Another way is to secure Barangay Certificate that you really are living in the said address if the landlord is not present to provide for signature of authorization.
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QUESTION: What are the Proof of Income?
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These are income documents needed by the Developers and financing institutions to know the capability of clients.
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These income documents may be as follows: 3 months latest payslips COEC ITR
COEC Stands for Certificate of Employment with Compensation
ITR Stands for Income Tax Return Client may show ITR of the previous year if the latest ITR is not yet present
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QUESTION: What if client is an OFW, ITR is not applicable to them?
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Just present what is applicable, like 3 months latest payslip and COEC.
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There are countries that provide ITR but of the country. They can be used as proof of income with COEC.
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QUESTION: I heard that PDCs are also required. How can I get them?
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Opening of a checking account usually requires the client to have at least a savings account that has at least 6 months of continuous credit and debit. Banks also requires a certain amount maintained to the savings account before opening.
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PDC Stands for Post Dated Checks
Developers usually give referral letters so that you can open a checking account in a bank
The requirement will be disregarded if a referral letter is presented.
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QUESTION: What are some documents the client will sign upon
reservation of a unit?
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Client Registration Form (CRF) or Buyer’s Information Sheet (BIS)
Reservation Agreement (RA) Contract to Sell (CTS) Deed of Absolute Sale (DOAS)
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Client Registration Form (CRF) or Buyer’s Information Sheet (BIS) is a form or set of forms where the client will fill up for the purpose of reference and information for the Developer.
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Reservation Agreement (RA) is an agreement signed by both parties that they agreed that the unit is already reserved to the client.
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Contract to Sell (CTS) is a contract wherein the seller retains the title and ownership of the property until the full payment of the purchase price by the buyer.
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Deed of Absolute Sale (DOAS) is a deed that states that one party is transferring his real estate property rights to another without any conditions attached to the sale except the buyer’s payment of the purchase price.
Usually given after paying the full amount in the financing institution or paid in cash.
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QUESTION: What is the process to move-in in a unit?
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Reservation of Unit
Submission of Requirements
Notice of Approval
Notice of Acceptance
Move-in
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QUESTION: What is Notice of Approval?
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Notice of Approval (NOA) synonymous to Letter of Guarantee
NOA is a letter which contains the approval of client’s home loan. Cash or check is not yet included
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QUESTION: What is Notice of Acceptance?
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Notice of Acceptance (NOA) is a letter which contains the cash / check equivalent of the home loan.
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QUESTION: I heard once the “Negative List”. What is it?
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Negative List is a list of specific industries of work of people involved at high risk of death.
It may also include a specific countries or places that are war-torn or dangerous to live in.
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This list is used by different financing institutions if they are allowing for the approval of home loans of such persons.
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Sample of High risk Industries Police / Military Lawyers
NOTE: the following are examples by the author and not necessarily followed by financing institutions.
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Sample of High risk Countries Iraq Iran Syria Afghanistan
NOTE: the following are examples by the author and not necessarily followed by financing institutions.
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END