|
FHA loans can go a lot higher than 28%, how high your bank will approve you for can depend on a number of factors including the bank's credit overlays (when they choose to be stricter than FHA's requirements), your credit score, what response you receive from the FHA Total Scorecard (an automated underwriting system, it renders a decision based on your credit report, assets, income, and other factors), etc. If you have a strong loan scenario it's certainly possible that you'd be approved at 50%. One thing to keep in mind is that the bank will be looking at 2 ratios, the front and back ends. The front end is your housing expense, which is the combination of principal, interest, taxes, insurance, and mortgage insurance and HOA fees (where applicable) - basically your total house payment divided by your total qualified income. The back end ratio is your total debt, so on top of your housing payment that will include the liabilities on your credit report, alimony and child support if you pay them, and other stuff of that nature. When he's telling you he can get you an approval at 50% he's talking about your back end ratio so you're not looking at a $4k/month mortgage but $4k for everything. Depending on circumstances/loan program the front end ratio may not matter at all. For conventional loans Fannie and Freddie really only care about total ratio in their automated underwriting systems analysis. In regards to backing out of the loan after collecting fees, with all the recent regulatory changes I can't imagine anyone being stupid enough to try that. Plus, you're probably paying the appraiser or an appraisal management company to have the appraisal done, not the broker directly. I don't think many places charge extravagant upfront fees these days, for most shops they don't get paid unless the loan funds.
|
#
¿
Jul 31, 2011 04:17
|
|
|
|
| # ¿ May 15, 2024 03:31 |
|
|
demonachizer posted:Thanks for the heads up it really helped me feel less nervous. I was worried because everywhere online talks about the 28% number for FHA loans as if it is a hard limit. The 28% figure you often see is more in relation to this: Leperflesh posted:All of this is, of course irrelevant; as a buyer, you should get a loan you can easily afford. Just because a bank says they'll approve you for, say, $350k, doesn't mean you can't limit yourself to $200k, on the basis that that's the most you want to spend. A smart buyer evaluates his own budget and pays not a penny more than what he's comfortable with, the bank's offers be damned. This, this, a thousand times this. Your bank being able to approve a particular payment doesn't mean you should take it to the max. The ratio your lender calculates doesn't encompass all of your debts - they're going off the minimum payments on your credit report. Your cable/internet/cell phone/food/etc that you spend hundreds on every month is going to show up as a $25/month minimum payment on your credit card, and that's what the bank will qualify you with. In reality you're obviously spending a lot more than $25 every month. Plus, your ratios are calculated using gross income and not net - after state/federal taxes, 401k contributions, etc a fair amount of the income you're qualified with you don't have access to. If you are interested in buying, do the math on what you actually spend a month and figure out what is a comfortable payment for you. From there you can work out how much house you can afford. Don't get pressured into buying more than you're comfortable with just because the bank can technically approve it. demonachizer posted:It seems like he is implying the appraisal would be paid to them? I will walk I guess if they ask me to pay them for the appraisal since it seems like I would absolutely want an independent appraisal. Depending on the lender the company is planning to sell the mortgage to they will probably have some sort of system in place for the ordering of the appraisal and to confirm the appraiser is acting independently. Often times the appraisal will be ordered through an appraisal management company which basically acts as a go between for the appraiser and the mortgage company to ensure nothing fishy is going on. I'm not super familiar with FHA guidelines in this regard, but paying the mortgage company directly for the appraisal is unusual in my experience. He might just be telling you the cost as an FYI type thing for what to expect cost wise, thanks to RESPA guidelines he's liable to pay you restitution if he under discloses fees on your Good Faith Estimate.
|
|
#
¿
Jul 31, 2011 05:45
|
|
|
MrBuddyLee posted:Our original lender, Chase, refuses to transfer the appraisal and proof of AIR (Appraisal Independence Requirements) compliance to our new lender. AIR is a law that basically forbids lenders and appraisers from scheming to inflate home values. I don't know Chase's specific guidelines, but for the bank I work for we will transfer appraisals ordered through us to other lenders for a fee (which is generally waived when we have declined the loan for whatever reason). Have they just flat out refused to transfer it under any circumstances? Were you going through Chase directly or through a broker of some sort? If you went through a broker they might at least be able to get you an explanation of Chase's policies on this, Chase should have written guidelines for accepting and transferring appraisals from other lenders. Or Chase may just not do it at all (if so, see your bullet point 2). Captain Windex fucked around with this message at 07:44 on Aug 4, 2011 |
|
#
¿
Aug 4, 2011 03:44
|
|
|
Feces Starship posted:My parents are selling their house in one year. I need to buy a house in one year. Shouldn't be any real problems from the bank, unless as noted above your parents were in a short sale. Buying from your parents is a non arms length transaction which is not permitted on short sales due to being a bail out. Assuming you don't have any realtors on the transaction your bank may have some extra requirements due to being for sale by owner, but they probably won't be anything serious. It's not terribly uncommon for family members to buy/sell homes from each other, as long as it doesn't come across as a bailout it's usually not a big deal.
|
|
#
¿
Aug 6, 2011 06:00
|
|
|
Leperflesh posted:For the purposes of getting a loan, your wife's income won't be counted. At all. Banks want 2+ years at a job before they'll count the income. This depends a lot on your lender, type of loan, and type of income. Conventionally, Fannie Mae will generally accept less than 2 year work history if there's a reasonable explanation why you weren't working prior to your current job. Depending on your Fannie Mae findings you might be just fine with a year to date pay stub. For self employed borrowers or people who need to use overtime, bonus, commission, etc. to qualify generally a 2 year history is required (though there may be some flexibility for 12-24 month history). Some lenders are stricter than the Fannie requirements of course, but many will only require what the investor does. FHA is probably an entirely different beast but I don't know enough about government loans to comment on that.
|
|
#
¿
Aug 17, 2011 03:12
|
|
|
Leperflesh posted:For the purposes of qualifying for our loan, my broker indicated that very few banks would consider my wife's income from two of her three jobs: one she's had for like 8 years, but only 1 day a week; the other two are much more recent. Fortunately my own income was more than sufficient to qualify for the size loan we were getting. Ah, yeah that would explain it. Multi or part time job income is automatic 2 year history required. And if they can qualify without her income at all, even better. Saves your broker and underwriter a lot of hassle in verifying the additional income.
|
|
#
¿
Aug 17, 2011 03:51
|
|
|
If you're looking to go conventional, Fannie Mae's High Balance program allows for up to 90% loan to value on an owner occupied rate/term at the loan amount you're looking at for fixed terms. Freddie's analogous program allows for similar, but gently caress Freddie. Anything above 80% will require mortgage insurance which depending on the type of coverage has various effects on your payment as well as additional requirements related to your debt ratios, reserve requirements, FICO, etc. This is also subject to county loan amount limits which will be reduced in late September (and eligibility is based on the date of your note/loan funding). Did you have any specific questions about refinancing? Knowing property type is helpful as well - CA condos get the short end of the stick generally, not as bad as Florida but that's hardly a compliment.
|
|
#
¿
Aug 17, 2011 08:30
|
|
|
jomiel posted:2) How do people usually handle loans from their parents? If we get a mortgage, would we have to have it in formal writing? For conventional loans, unsecured personal loans are not an acceptable source of funds for down payment. If you're looking at a loan from the parents to help with the financing, you'll have to draw up a mortgage note secured against the property which will have to be subordinated to the bank's lien. The note would have to include the terms of the loan, monthly payment, etc and the amount of the subordinate financing will be included in your combined loan to value which can impact your eligibility. You'll also have to qualify with the payment as part of your debts. Finding a bank that would even go for it may be tough as well, I can't think of any specific guideline we have against loans from family members but that scenario just screams "bad idea" to me. Contract positions are generally considered to be self employment which then means 1-2 years of tax returns in that line of work in order to use the income to qualify. If you do switch to contract work you're probably going to be stuck waiting it out unless the company you contract with brings you on as a full time salaried/hourly employer and confirms the new arrangement in writing. YMMV of course, there is a bit of wiggle room in what has to be called "self employed" in that sort of situation, but I wouldn't rely on it.
|
|
#
¿
Aug 18, 2011 06:47
|
|
|
sanchez posted:We're being offered a refinance at 4.5% by the broker that did the original loan, which seems high compared to the rates that are flying around here. Is there anything that controls those rates beyond lender and zip code? Pricing adjustments to rate can depend on a large number of factors. Loan amount, loan to value, credit score, rate/term refi vs cashout, occupancy, property type (condos and multi unit get shafted), interest only vs fully amortized, subordinate financing, and loan term are all things that are considered by Fannie Mae. Your bank may also adjust for things such as the state the property is in, your debt to income ratio, and really anything else that could conceivably make your loan more or less risky. Freddie generally has similar adjustments. FHA is a bit different, but the same types of factors can influence your rate as well as the monthly mortgage insurance that is included. The rate that you're quoted can also depend on the business channel your loan officer is operating through. Generally speaking, retail branches (walk into Chase branch, get a Chase loan) are going to offer less competitive rates than mortgage brokers and correspondents. Additionally, you can generally take a higher rate to increase the pricing on your loan to help cover your prepaids and closing costs - this is how you get the "no cost" refis. If you want to see a big confusing chart on what factors influence Fannie's pricing, feel free to take a look at https://www.efanniemae.com/sf/refmaterials/llpa/pdf/llpamatrix.pdf . Your lender can of course tack on stuff on top of this if they want. Freddie's adjustors are generally similar. If there's any interest in it, I can write up a bigger post going over the interest rate/secondary market sale process or just general stuff about the mortgage approval process. I'm a conventional mortgage underwriter with a bit of knowledge about the other aspects of the loan transaction, from the bank side at least. I won't go super in depth about guidelines and scenarios since that poo poo you should really go over with a loan officer to get a complete picture of your loan situation, but I can shed some light on the process and tips on what to do/not to do to ease the approval process. (Here's a hint: don't retire 2 days before your loan is set to fund)
|
|
#
¿
Aug 18, 2011 19:08
|
|
|
skipdogg posted:edit: *double caveat* My family exited the mortgage broker business in 2007, so there may be new rules in place governing transactions like this that I'm not aware of, but the general idea of this post should still be accurate. I think they changed the maximum rebate/commission a broker could make to 4% a while ago, so there's no more predatory lenders tricking people into 5.5% mortgages and making 9% commission on them when they could have gotten a 4.25% loan and everyone would be happy. Welp, you saved me typing a whole lot of words about how interest rate pricing works. There have been some regulatory changes since 2007, but how you explained it is still essentially correct. One thing to add is how the different types of loan originator impact your pricing/disclosures. As I alluded to in an earlier post, there are essentially 3 types of loan officers/loan companies: retail, brokers, and correspondents. Retail: These are loan officers/loan shops that work directly for a specific (generally large) mortgage lender. These are your Bank of America/Chase/Wells Fargo/etc loan officers. You walk into a BoA branch, talk to a BoA loan officer, and get a BoA loan. Generally speaking, these guys will not be able to offer as competitive rates as the other business channels as there is less incentive on the part of BoA (or Chase, or whoever) to compete on offered rates/pricing because their loan officers have little (if any) ability to take the loan to a competitor. They may have access to some loan products that aren't offered to the non-retail branches, but if you're just looking for your standard conventional/FHA/VA financing this doesn't really matter much. Brokers: These guys are not attached to any particular mortgage lender or bank, though they may have a few preferred lenders that they send most of their business to. As such, they have a lot more options available to you and can work with you to find an appropriate lender for you depending on your circumstances. Every mortgage lender has their own particular overlays, so even though the loan may not be approvable with say Chase due to their requirements for using rental income to qualify, it might work through Wells Fargo because they have different requirements (note: I don't know Chase/Wells actual guidelines, just picking the names as an example). Your broker will work with you to get the appropriate loan documentation for your file and send it off to the mortgage lender who will be funding your loan to be underwritten. These guys will generally have more competitive rates than retail because the mortgage lender needs to provide an incentive to bring the loan to them rather than the guy down the street. The nice thing about broker shops is that with recent regulatory changes, all that pricing/premium you're getting due to picking a higher rate goes directly to you to help you cover your fees and closing costs. Brokers basically get paid what they disclosed to you up front and nothing more. Correspondents: The key difference between brokers and correspondents is who is going to be funding your loan. Correspondents are more likely to be your small community banks, credit unions, that sort of thing. They have their own money available to lend. Instead of taking your loan directly to Chase and having Chase fund your loan, they will fund your loan with their own money, and then turn around on the secondary market and sell your loan to Chase and be reimbursed for the money they lent to you. These guys are likely to have the best rates available to them since they are, generally speaking, more reliable and in better financial shape than a broker shop might be. You may not actually see any rate savings here though, because they are not required to disclose to you how much they are being paid by the mortgage lender for delivering the loan to them. In essence, the correspondent is your lender and so they are only required to disclose the financial aspects that result from funding your loan. What they receive later on when they sell the loan to a servicer/mortgage lender is not disclosed. This doesn't make going through a correspondent automatically a bad idea of course, some places will disclose how much they are being paid on the back end. You can always ask, they may or may not tell you - if they refuse to tell and you don't like that you can always walk away. Just depends on the company you're going through - don't be afraid to get quotes from a few different places to make sure you're not getting fleeced on your rate. Don't shop around too much though, as excessive mortgage inquiries on your credit report is a big red flag to your underwriter.
|
|
#
¿
Aug 18, 2011 22:08
|
|
|
DancingMachine posted:6% concessions jesus christ that is insane. I can't believe that is even legal. You can do up to 9% on a conventional primary residence <75% loan to value  Technically you can do even more than that, but it gets treated differently and things get rather messy at that point.
|
|
#
¿
Aug 24, 2011 07:20
|
|
|
TraderStav posted:A question I have: with this rapid refi, do you also get another 1% of the loan balance tacked on for the mortgage insurance? I just closed on my FHA loan two months ago, and seeing these rates plummet, have half-jokingly considered refinancing already if I could get the rate. Swallowing another 1% added to my loan balance is not something I'm too thrilled about though, unless it works out mathematically. Looks like FHA allows for partial refunds of your UFMIP in you're refinancing within 3 years of the loan being refinanced - but the streamlined refis still have the same 1% tacked onto the loan amount. I have no idea how this actually works in practice since I only do conventional stuff, but looks like you might be able to get a bit of that back... somehow TraderStav posted:Appraisers discount their assessment of the comps if there concessions in the sale. In my appraisal it was clearly laid out if there were any and their 'adjusted value' showed the concessions. Depends on the local MLS system, not all of them require the realtors to report actual concessions paid by the seller. The appraiser will usually note if concessions are common for the area, but not really the same.
|
|
#
¿
Aug 25, 2011 04:47
|
|
|
Guacala posted:Banks in my area are still financing homes with 80/20. No mortgage insurance was required when we bought our home two months ago and we only had 20% down. An 80/20 split refers to an 80% first mortgage and a 20% second mortgage, which is different from putting your own 20% down. For your standard second mortgage financing you can't do an 80/20 anymore for the most part, though there is a special case type of 2nd mortgage where you can still do it depending on lender.
|
|
#
¿
Sep 1, 2011 15:48
|
|
|
Froglin posted:He said he is willing to leave the mortgage as-is IF it's the only possible way I can stay here. I plan to try everything I can do to not have that be the case, but I just didn't want moving to be one of the options I'd have to consider. You won't be able to use the money gifted to you by your parents/grandfather as income. One possible route you can explore is adding your parents onto the loan for a refinance. For conventional loans Freddie allows the use of non occupying co-borrowers to qualify for a loan. Your parents income could be used to qualify then, but all of their debts and liabilities will also be counted against you in your debt ratios by the bank. They would also have to sign the note and so they'd be legally obligated to repay the loan if you're unable to do so for whatever reason, and would gently caress up their credit if you default. There's also the issue of being very underwater on your mortgage. You/your parents would need to pony up the cash to pay down the loan amount to acceptable levels based on the appraised value of your house. There are a few programs out there that have expanded eligibility as far as loan to value goes, but what is available depends on what investor your current loan is with. Do you know if currently you're in a Fannie Mae, Freddie Mac, FHA, or other type of loan? If you know you have a conventional loan at least you can check http://www.fanniemae.com/loanlookup/ and https://ww3.freddiemac.com/corporate/ to see if it's Fannie or Freddie. Depending on what you've got going on investor wise removing your husband may be tough on the expanded eligibility programs.
|
|
#
¿
Sep 4, 2011 06:02
|
|
|
Cascadia Pirate posted:I am getting close to closing on a place after about 5 months of the typical short sale clustercuss. My loan officer has a service of some sort where you pay something like $4,000 up front and you do not have to pay PMI. I can put down 10% on a $275,000 property comfortable and could probably put down a little more (close to 15%) if I had to. You're still paying for PMI, it's just an up front lump sum instead of a monthly payment. There are two basic types of lump sum MI - single premium and single financed. For single premium you bring in the cash at closing to cover the MI on the loan and then don't have to worry about making a monthly payment on top of that. For single financed the cost of the lump sum is factored into your loan amount so you have a slightly higher principle to pay off which then corresponds to a higher monthly payment. My bank doesn't do the single premium version so I don't know much about it other than a quick bit of googling - looks like not a bad idea if you can spare the cash and the numbers make sense compared to paying for it monthly. One downside I can think of is if you sell/refinance the property relatively early in the life of the loan it may work out to being more expensive than a monthly option.
|
|
#
¿
Sep 5, 2011 22:14
|
|
|
cannibustacap posted:To be fair, I was thinking my parents and my roommates parents could help us with the down-payment, then our "rent" would be us paying off the mortgage. However if we moved out, we'd have to find tenants or high a management company to take care of that. Unless your parents are Scrooge McDuck loaded, this is not a good idea (it is still a bad idea even then). If they're willing to help you with the down payment, have them gift you the funds. If it's a <80% loan to value situation then the entire down payment can be gift funds. Hopefully you can qualify for the loan on your own income/debt wise. Don't get roommates involved, the bank probably (definitely) won't go for it and it will end in tears.
|
|
#
¿
Sep 10, 2011 07:56
|
|
|
greasyhands posted:Can someone just back me up here. I think I have several mortgage brokers who don't know what they're talking about. On a FHA refinance with 15year terms, if the LTV is less than 89.99%, there should be no annual mortgage insurance premium, correct? The first link is outdated. Not sure what you mean for the second link about time frames not being mentioned, it states the cutoff date on 4 out of 5 pages of the memo what the effective date is. For FHA loans with case numbers assigned on or after April 18th of this year, on a 15 year mortgage the annual mortgage insurance premium for loans between 78-90% is .25%.
|
|
#
¿
Sep 12, 2011 07:41
|
|
|
Below 78% there is no annual mortgage insurance on a 15 year. Generally speaking the "5 year rules" apply to having the mortgage insurance fall off your current loan, and are unrelated to any potential refinance. That said, I only work on conventional loans so I don't know the details about FHA refis. Looking at the links you mentioned, I have to say I'm not all that surprised that there would be conflicting info given how much bullshit cross referencing FHA apparently does about it's guideline updates. Incidentally, if you're at 75% is there a particular reason you're still going FHA? Generally the rates are better conventional at that loan to value.
|
|
#
¿
Sep 12, 2011 07:58
|
|
|
Ah, yeah, a bankruptcy fucks you for 4 years minimum on conventional.
Captain Windex fucked around with this message at 08:22 on Sep 12, 2011 |
|
#
¿
Sep 12, 2011 08:20
|
|
|
Reggie Died posted:On the topic of DIY madness (suggesting someone with NO experience put a shower in a NYC apartment building = madness), do permits increase the value of a property compared to a similarly remodeled property without permits? I doubt it'll impact the value much, but may hurt your ability to get financing down the line - either as a future refinance or for your buyer when you're looking to sell. Non-permitted bathroom and kitchen upgrades can be a red flag/deal killer with many banks depending on what work was done. No one really cares about some upgraded counter tops and whatnot, but once you start talking about moving bathtubs/toilets around, rerouting piping, etc that can be a problem. In theory permitted work would have been done correctly and up to code (hopefully), whereas with unpermitted work who knows what kind of retarded poo poo people have done hiding behind that drywall.
|
|
#
¿
Sep 16, 2011 03:38
|
|
|
Shipon posted:Yes, they were lying. Not necessarily. For FHA and conventional loans allow the exclusion of co-signed loans if you document for the last 12 months the primary obligor has been making the payments on their own and on time. That said, cosigning is still a bad idea and you should really think carefully about it. Edit: reworded Captain Windex fucked around with this message at 02:23 on Sep 24, 2011 |
|
#
¿
Sep 24, 2011 02:12
|
|
|
Jorath posted:We have been offered a windfall gift to help pay for a downpayment from my in-laws. Is there anything that we should be aware of when recieveing such a gift? I'm assuming that the lender will want the money to be in our account for a while? Assuming conventional 20% down, your in-laws will need to sign a letter basically stating that they are giving the funds as a gift and no repayment is expected or implied. You'll also need to show the transfer of funds from your in-laws into your own checking/savings account or that the funds were sent to escrow directly. You should check with your broker/loan officer/processor what your exact documentation requirements will be prior to transferring the funds, every lender is a bit different about what is/isn't OK or acceptable (we don't like gift funds sent directly to escrow, for example). Gift funds are extremely common in purchases so not usually problematic unless your in-laws are unwilling to provide statements for their accounts. PoliSciGirl posted:One more question about mortgages- I have a few paid off collection accounts (4). Three out of 4 of them are to be taken off in the next year, but one was paid in 2009. I have a 730 credit score and my husband has almost a perfect credit score. We don't have any debt. We are putting 20% down. Will we have a problem getting financing? We are already pre-approved, but I've heard that means nothing.
|
|
#
¿
Oct 11, 2011 02:42
|
|
|
Cmdr. Shepard posted:For some background, I closed in March of this year and I have an approximately $74k mortgage at 5.25%. Is it a good idea to even consider refinancing after such a short period of time? What are "general" guidelines for refinancing costs I should take into consideration? Whether a refinance is worth it will largely depend on the reduction in your payment and the closing costs you will have to pay out of pocket to close the new loan. Both of these items are going to be largely dependent on the lender you go through, your loan scenario, and relative interest rates. You'll need to know what rate you can get to determine how much you will be reducing your payment by, and then compare that against the fees you are quoted for your various closing costs. These will generally include your appraisal, title work, broker fees, lender fees, discount, etc. Compare the reduction in your principle & interest versus your out of pocket costs to refi - how long will it take to recoup your closing costs? A $100 reduction in your monthly payment is awesome, but if you're paying $6k out of pocket to close that loan then it'll take 5 years to be worth doing so. In 5 years will you be making enough money that paying a bit more then is preferable to being out $6k now? There's also the concern about where you are in your amortization table to take into account. In the introductory stages of your loan a massive chunk of your payment goes to interest which does not build up any equity in your home. This is less of a concern for you since your loan closed in March, but in general it's something to think about. Leperflesh posted:Or you could refi into a 10yr (do they have those?)
|
|
#
¿
Oct 15, 2011 04:40
|
|
|
Tragicomic posted:Hey guys, looking for advice on a lender for a refinance. Fixed, unfortunately. Your debt to income is a very small "good" in a whole shitload of "bad" for that loan to value. As far as I know, VA doesn't allow for investment properties so can't refi there. The FHA and conventional programs with expanded LTV guidelines are limited to refinances of existing FHA and Fannie/Freddie loans. I would be shocked if a bank had a portfolio program that would take that kind of loan these days. Looks like you're rather screwed on a refi unless you can bring in the cash to pay down the value.
|
|
#
¿
Oct 17, 2011 06:08
|
|
|
American Jello posted:The baby is probably 7 months away or so. I have nothing saved You should probably think long and hard about the latter half of this quote. Fiscally speaking, are you prepared for the burdens of a child and home ownership at the same time? Kids are expensive, home repairs are as well. While the baseline payment for a home may be attractive, you have to consider all the additional costs for owning a home vs renting. Taxes, insurance, and HOA add up. Need a new roof? AC exploded? If you're renting that's all the landlord's problem, if you're the landlord you're on the hook for thousands of dollars in repairs. If you're planning to sell in a few years you also need to consider the impact of the 6% hit you'll take from the agents upon sale The OP talking about 3.5 vs 20% may be somewhat outdated from the OP. FHA vs conventional is a fairly different beast as far as loans are concerned, and I'm only really qualified to talk about conventional. That said, things have changed a fair amount since the OP was originally created. Someday I'll probably get off my lazy rear end and discuss the various changes in how the industry works. Captain Windex fucked around with this message at 08:12 on Oct 19, 2011 |
|
#
¿
Oct 19, 2011 08:06
|
|
|
Guacala posted:There was discrepancy in the amount of square footage between the MLS and county info, yet the appraiser didn't go inside and measure it himself. There are several different types of appraisals that can be performed on a property dependent upon loan type, automated underwriting response, and lender requirements. Sounds like you had a 2055 appraisal (or 1075 if it's a condo) completed which is an exterior only appraisal. As can be imagined from the name, the appraiser only examines the exterior of the home for basic quality/condition values and then uses public records regarding the interior dimensions, room count, etc to complete the appraisal. Since they do not examine the interior of the home, they have no way of confirming the accuracy of the MLS vs county records for gross living area - about all they can do is comment that there is a discrepancy. If you want to have the appraiser address such issues you'd need to get a 1004 full appraisal (aka a 1073 for condos or 1025 for multi unit properties). This type of appraisal involves interior and exterior examination of the property and the appraiser will actually measure square footage and attempt to address issues like square footage discrepancies. Due to the additional review required, they're more expensive than an exterior only appraisal of course. As for what you can do when it doesn't appraise out, you have a couple options. First, you can work with your broker to to try find other/better comparable properties (comps) that are more similar to the property and appeal the value with the appraiser/appraisal management company. Sometimes appraisers miss valid comps, if you make them aware of properties they didn't include they may amend their report to reflect a higher value. When they don't amend their opinion of value the appraiser can at least address why the additional comps are not supportive of value hopefully. If that doesn't work or your appraiser appears to be a moron (not entirely uncommon) you do have the option of ordering a 2nd appraisal. Assuming it does come in higher, you may still have trouble with the lender as you have conflicting opinions of value - which one is more believable? Given what has happened to property values over the last few years lenders are very conscious of appraisals with inflated values. If nothing else you may be able to leverage a reduction in the purchase price of the property - depends on how desperate your seller is but it's not uncommon to see an appraisal come in short and then the purchase price drop accordingly.
|
|
#
¿
Oct 25, 2011 02:54
|
|
|
Guacala posted:Here's what happened - after scouring the appraisal, we noticed the appraiser hadn't used the right square footage from the MLS document; the subject home was 2800 square feet and he had 2000. He submitted a new appraisal at $299k and it was immediately forwarded to the buyer's banker. Problem now is that you have a $24k increase in value justified solely by using the MLS square footage rather than the county records which should raise some concerns for your lender. You have a large discrepancy in square footage between county records and the MLS - 800 sq ft isn't, generally speaking, a rounding error. The realtor is hardly a disinterested party to the transaction and they're the ones who create the MLS listing. Without the appraiser going in and manually verifying the measurements himself it's impossible to say what the correct square footage is and appraise accordingly. Additionally, such a large discrepancy in square footage is usually indicative of additions having been made the property - were these permitted additions? What was added on? Is the quality of work done in line with the rest of the property? Who knows, the appraiser didn't actually go inside. For my bank non-permitted additions can frequently be deal killers. Personally, if I had the two appraisals come through I'd have some serious concerns about the property. Fortunately my bank doesn't accept exterior only appraisals so I don't have to deal with this particular scenario. That said, your bank may not care and just lets it go through - that they even accepted this appraisal type in the first place is probably a good hint. Exterior only appraisals are basically nuts, and I'm glad I don't have to deal with them.
|
|
#
¿
Oct 25, 2011 04:55
|
|
|
GreenCard78 posted:With all that said, how does one get a home equity loan? My understanding (from reading wikipedia) is that it is a loan taken against their home equity and then paid back, exactly how, I'm not sure if it's $xxx per month or when they eventually decide to sell their home. They bought their home in 1994 for $186,000 and current homes in the neighborhood go for nearly $370,000. The financial bubble got home values up as high as $420,000 and then down to as low as $350,000. In the last two years there has been some rebound in value. The neighborhood is good because the school system is excellent, has the best elementary school in town in walking distance, and has several synagogues within walking distance as well. The general process for getting a home equity loan (HELOC) is going to be fairly similar to any other loan. Speak to a loan officer at a mortgage broker or retail branch and they'll take your application, collect the usual loan documents, read over a truckload of disclosures, order an appraisal (probably), title work, etc. Same as any other loan really, the main difference is that HELOCs are much less common these days compared to say 2007 or so, you may need to do a bit of shopping around to find a lender that will have a program available that works for you. Where HELOCs really differ is how they work once the loan is closed. Once the loan is setup, you have a line of credit secured against the home that you can draw on at any time. You may be given special checks to draw on it, some type of debit card, or if you have an existing checking/savings account with the bank you may just be able to transfer funds directly from the account. Generally, HELOCs are setup as a two stage loan. The first stage, the draw period, is typically 10 years long and only during this time frame can you draw on the available balance in your line. HELOCs are generally an adjustable rate, interest only payment during this period so your monthly payment will usually be pretty low (but you're also not paying down any principle). Once the draw period has ended, you'll usually enter the repayment period - normally 15 years long, at this point your credit line is frozen and you begin to pay back the principle and interest. Your interest rate may also become fixed at this point, or it may continue to be adjustable in which case your interest rate would continue to change every year or so. Note that some HELOCs are balloons, meaning that the end of the draw period you are expected to pay the entire amount owed in full (or refinance the balance into a new loan). How high of a line the bank is willing to give you would depend on the value, how much existing financing there is on the property, combined loan to value, etc. The main advantage of a HELOC is that you can access the funds more or less whenever you want and only have to pay interest on the current outstanding balance - so even if you've got a $100k maximum line, if you've only drawn $5k you're only paying interest on that $5k. The downside is that HELOCs will have higher interest rates, and since they're adjustable they can go quite high during the life of the loan depending on the programs caps (how frequently and by how much the interest rate can change). Additionally, once you finish out the draw period you're payments will be amortized over 15 years (or 10, 20, whatever) which is shorter than the standard 30 that most people do these days. If money's tight that may be an issue. And if it's a balloon I hope you're in a position to pony up the cash or be ready to refinance it again. The other option your parents may want to pursue would be either a straight cash out refinance or possibly, depending on the work that needs to be done, a renovation loan. You mention that the house isn't in "good" condition, but the work that you mention mainly seems to be cosmetic/"want" upgrades rather than "this place is a poo poo hole and no one would want to live in it". Under the assumption that the house is in a salable condition, for a straight up cash out refinance your parents can take out a new, larger loan on their home using the proceeds to payoff the current loan and pocket the rest of the money. They can stick it into a savings account and do whatever they want with it - payoff debts, remodel, install a library, whatever. How much they can get would be subject to the outstanding balance on their current loan, appraised value, loan to value restrictions, etc. The main advantages to a cash out refi over a HELOC is that right now fixed interest rates are still pretty low, so even though you'd be paying more currently due to full principle & interest payments you'd probably pay less in the long run and not have to worry about your adjustable rate spiking up 10, 15, 20%, or whatever. A third, pain in the rear end option is to pursue a renovation loan. You'd only want to consider this if the house actually is in a lovely condition and the bank wouldn't otherwise lend you the money. It's a fairly specialized product and not a lot of brokers do them (they are seriously a giant pain in the rear end). A very short explanation of renovation loans is you would work with contractors to get bids on whatever repairs/work you want done on the home, the bids get submitted to the bank along with the loan package and appraisal and, assuming they agree to lend you the money, will hold the renovation funds in an escrow account and dole it out as necessary to the contractors to have the work completed. If you can avoid it, you're much better off doing the other two options and as I mentioned very few people are willing to do them (again, pain in the rear end) so even if you want to go this route it may not be an option. As to whether you should do it/good return on investment/etc., I will leave that to the other financially minded goons in this thread. If you do decide to proceed, definitely discuss your options with a reputable broker who can give you better advice once they've seen your parents financials. And if, for some reason, you go with a renovation loan for the love of god find someone who has a lot of experience with them to handle it for you. I've seen a lot of renovation loans turn into complete clusterfucks because it was the LO/processors 2nd renovation loan ever  Edit: Spelling. And drat that's a lot of words. If you want me to clarify anything let me know. Captain Windex fucked around with this message at 01:06 on Nov 3, 2011 |
|
#
¿
Nov 3, 2011 01:02
|
|
|
GreenCard78 posted:I've got a few questions. You say salable condition and that the repairs are cosmetic. The home itself is in good condition. The foundation, firewalls, bricks on the front, back side, etc are in good condition. HOA keeps that in check. We've never had a problem with gutters or anything else that town homes can have problems with because they are connected to their neighbors. There are a few piping problems that should be addressed, namely the dishwasher and an upstairs bathroom but those haven't been the biggest problem for my parents. My parents grew up washing dishing by hand and although they could spend the money, they just haven't. The upstairs toilet they get along without, they already have two others. Again, they have the money but just haven't felt the need to replace it if they get along without it. I think they had it fixed twice or something and both times the plumber did a shotty job. Fed up, they just moved on. Neither have the mentality I have, I'd have no problem telling the plumber "gently caress you, do your job correctly." Well, salable from the perspective of the bank is going to be a little different from your idea of salable. Most of the issues you've noted on the property are things that the bank won't know or really care about. What you need to keep in mind is that your appraiser's job is to give an opinion of the value of the property based upon their basic observations of the home. They are NOT home inspectors (and they will mention this every chance they get in the appraisal itself) and so a lot of the issues that you have noted will not be addressed in the appraisal because they have little bearing on the value of the property. If they notice obvious deficiencies in the property they should address them in the report, but most of the nitpicky issues would only be noticed by a home inspection (which is not normally done on a refinance). Your appraiser won't notice/care about a leaky dishwasher. They will (or should) notice if said leaky dishwasher has caused water damage in the basement ceiling which has subsequently resulted in a massive mold infestation. Water damage and mold have serious consequences on the ability to sell the home, having old carpet and needing a fresh coat of paint don't (for the most part). Not sure what you mean about getting along without a bathroom in this context - I assume the plumbing is non functional for that bathroom? Might be OK depending on what's wrong exactly with the bathroom and what your lenders stance is on this (talk to a broker). GreenCard78 posted:All that being said, my understanding of the HELOC loan would be a loan of X amount that they could draw upon within Y years to pay for the contractors to come in and do Z work. After everything has been completed, withing Y years, they begin to repay the loan over the predetermined year limit. So if they spent $50,000 on everything and decided it was done, they would end the loan period and begin the payment period of whatever years. The interest rate during the first loan period would change as it entered the second period. Well, usually the period that they are eligible to draw and the repayment periods are set time frames. Some HELOC programs do allow you to basically "lock in" some or all of the outstanding balance - the portion that gets locked in is basically immediately converted to a principal and interest payment and they are no longer able to access that portion of the line. For example, on a $100k allowed line your parents have taken $40k in draws and they convert that to the repayment period. The $40k then gets repaid based upon a locked in interest rate and they make principal and interest payments, while the remaining $60k of their line is available if they want to continue taking draws for additional funds. That said, this is a very general look at how HELOCs work. Fannie Mae, Freddie Mac, FHA, and VA do NOT offer HELOC products, so anything you're offered is going to be some sort of portfolio program that is going to be fairly specific to your specific lender. For the most part, a Fannie Mae loan is going to be pretty much the same whether you go through Chase, Wells Fargo, or Generic Federal Credit Union. HELOCs will have a high degree of variability between every lender since there's no standard product offerings. GreenCard78 posted:I think that is the type of loan that would work best. They could refinance (into infinity) and if, let's say, they still owe $86,000 on the home (I don't know how the mortgage is set up, if they are paying interest primarily first or if it's principle second, etc so I just guessed if the payments were even with 17/30 years) and got refinanced loan for $146,000 (just an example), they would have essentially $60,000 in an account to be used. However, they would be stuck with another 30 years of loans they will die before they are out of. They will, however, probably have a less of a monthly payment ($186,000 vs $146,000) on their mortgage and no additional loan to pay off. Well, for a standard cash out you have loan terms of 10-30 years available to you so if it's an issue of not wanting to take out a loan that will outlive them they could always get a shorter term loan (assuming they qualify with the increased payment).
|
|
#
¿
Nov 3, 2011 05:34
|
|
|
 A lot of  and effort posting follow So you've read this whole thread, and for some dumb reason you still want to buy your own home. Do Never Buy. But if you do really want to buy, hopefully this post will provide some insight and tips on the mortgage process so that you can successfully get the loan to buy the home of your dreams (nightmares). To get it out of the way, I work at a large bank as a mortgage underwriter. My job is to review your loan application, credit report, appraisal, and other supporting documentation and use it to make a decision on whether we will approve you for a loan or not. I'm not going to try to sell you on getting a loan or not, and I will not recommend any particular brokers or banks to go through. I'm also not going to argue about the current financial crisis, housing bust, retarded underwriting practices from 2008 on back, or related topics. This post is simply tips and general information that will hopefully help make the loan process as painless as possible. A few things to note before I get started then: I only do conventional loans, so what I've written here has those in mind primarily. That said, the info mostly is general enough that it should be applicable still to FHA and VA loans as well. If I get into more specific topics I'll try to specify when something applies to just conventional or just government (when I know). KEEP EVERYTHING YOUR BROKER/BANK GIVES YOU. THIS APPLIES TO DOCUMENTS PROVIDED BOTH BEFORE AND AFTER YOUR LOAN CLOSES. DISCLOSURES, GFEs, TILs, YOUR APPRAISAL, NOTE, MORTGAGE. EVERY-loving-THING. This really should go without saying, but I see so many loans where the borrower “can't find” something and it holds their loan up for some dumb reason. You probably won't need them, but we are talking about hundreds of thousands of dollars of money – there is no excuse to not hold onto every scrap of paper as it may become essential later on. There are tons of regulatory changes that have come down over the last few years (particularly in regards to the fees that can be charged to you) and almost all of them protect you if your broker fucks up. Your GFE and TIL are a key component of this. Definitions/Key Terms: GFE – Good Faith Estimate. 3 page document that outlines the fees/costs that you can expect to incur in closing the loan. Lenders are now required to adhere to the fees quoted for the most part (there are some tolerances of what is allowed to change, but it's better than the old system where they could change whatever they wanted, whenever). An important document, definitely hold onto it. An example can be found at http://www.hud.gov/offices/hsg/ramh/res/gfestimate.pdf TIL – Truth in Lending. Another disclosure, this one talks about your interest rate, has an amortization table for your payments, and a few other things. AUS – Automated Underwriting System. The vast majority of loans are actually underwritten in conjunction with an AUS program. Fannie and Freddie each have their own system, and have offshoots that handle the government loans as well. These systems analyze your credit report as well as the stated income, liabilities, assets, etc and make a base decision on whether you are acceptable or not. It is then the underwriter's responsibility to verify the accuracy of the information and review the stuff that can't be automatically reviewed (appraisal, title, occupancy, etc). LTV – Loan to Value. Your loan amount divided by the value of the home, if there is subordinate financing there is also the CLTV or Combined Loan to Value (1st loan + 2nd loan divided by value). This is a large driver of what programs are available to you, mortgage insurance requirements (if any), and the interest rates that are available to you. Lower is better as far as the bank is concerned (this is also where your equity in the property comes from). DTI – Debt to Income. This is the ratio of your expenses versus your income. This is also further split up into front end which is just your housing expense (mortgage payment) and the back end (mortgage payment plus every other debt you have). Again, impacts your eligibility for various loan programs and lower is better. HUD-1 – Document that you'll receive at closing, basically itemizes out every fee/charge that you and the seller pay, shows who gets what, etc. Title Report – This will be ordered for you by the processor/loan officer, the title company does a review of the county records for the property and confirms who owns it, what type of ownership, and what liens, judgments, easements, encumbrances, etc. apply to the property. Having a clear title is very important as it determines that you (or the seller) have legal ownership of the property amongst other things. Left over judgments/liens/etc. can hold up your loan approval and are generally a bad thing. ARM – Adjustable Rate Mortgage. Pretty much what it sounds like, your interest rate can change over the life of the loan. I'll go into more detail about how these work later. IO – Interest Only. Much less common and much stricter standards these days, for the first 10/15 years of the loan you will only be making interest payments on the loan. After that you'll begin to make principal and interest payments for the remaining 20/15 years of the life of the loan (or refinance into a new loan, or sell the house, whatever). Occupancy: Whether a home is going to be your primary residence, second home, or an investment property. Determines program guidelines, documentation requirements, as well as your interest rate. Also has to do with how “believable” a purchase is for owner occupied properties. Currently have a 5000 square foot mansion on the beach and you want to buy an 800 sq ft condo in downtown Detroit as your primary? Probably not. Short Sale- A property where the seller's existing bank has agreed to settle the loan for less than the total amount owed. The sale becomes contingent upon the bank agreeing to the terms of your offer. You can get some good deals here, but it can also cause some massive headaches due to the extra party. Short sales hurt the seller's credit rating/eligibility for future loans less than a foreclosure. Foreclosure – Property has already been repossessed by the bank and the bank is acting as the seller. Fannie Mae/Freddie Mac – The two government sponsored entities that purchase and securitize conventional loans. They set down the standards that conventional loans are underwritten to and so conventional loan requirements are going to be mostly the same between all lenders (though banks will always have a few overlays for various situations where they are more stringent). There are some differences between the two as far as their standards/requirements, but the differences are largely irrelevant as far as you, the borrower, are concerned (gently caress Freddie). MI – Mortgage Insurance. For conventional loans, if your LTV is >80% then you will be required to have MI on the loan. This is an additional cost to your loan that can take a few different forms (monthly premium, paid up front as a lump sum, or paid by the lender in exchange for a higher interest rate are the most common). In the event of your defaulting on the loan, the mortgage insurance company will reimburse your lender for a portion of their loss depending on how much coverage you were required to get. FHA loans have both a monthly component as well as an upfront fee that you pay for coverage which can be financed into the loan amount. VA you just pay an upfront fee, and depending on your circumstances I think that fee can even be waived (disabled vets I think?) I'll add more as I think of them. I'll try to avoid throwing too many technical terms/acronyms at you guys, but I'll be damned if I'm going to fully type out LTV and DTI every time I need to use it. Important People Loan Officer (LO): Takes your initial loan application, discusses various product offerings/options available to you, quotes you fees, etc. Paid on commission, and generally only gets paid if your loan closes. Processor: Once the LO has taken your application and gotten you started on the loan process, the processor will work with you to collect the required documentation, order title, appraisal, probably coordinate your closing, order loan documents, work with the lender, etc. Basically they do all the heavy lifting. Underwriter: Me! Works for the lender you're trying to get the loan through. Reviews the loan application, income, assets, title, appraisal, etc. Confirms the data integrity for the parts that get run through AUS, and verifies that the rest of it meets the banks underwriting standards. You'll (probably) never talk to me directly though, questions/concerns about the process will be addressed by your processor or LO. Settlement Agent: Your title officer, escrow agent, or an attorney that is handling the closing – can take a few different forms depending on the state you're located in. Often the title officer and escrow agent are the same individual/company. Sometimes it's an attorney that specializes in this type of law. Again, method is state specific but the basic role is the same. They handle the loan closing – the funds will be wired to them, they approve your final HUD-1, disburse funds, reconvey the existing liens, record the new mortgages, transfer ownership with the county, etc. Documentation First of all, the documentation I'm listing here is basically the worse case situation you'll run into (as far as time length required), for a lot of loans you can get away with less (so 1 year instead of 2, 1 month instead of 2, etc). That said, if you still have everything mentioned here keep it available but ONLY PROVIDE WHAT YOUR PROCESSOR ASKS FOR, AND NOTHING MORE Quick notes: Asset statements and paystubs are only good for 90 days. Additionally, monthly asset statements should be dated within 45 days of your application, and quarterly statements within 90 days. Paystubs should be dated within 30 days of application. In either case, since they're only good for 90 days you should provide the most recent ones. Credit Report This will be ordered by your LO/processor and will contain information from all 3 credit bureaus (TransUnion, Equifax, and Experian). This is one of the most important documents related to your loan, as it will tell the bank about your historical use of credit, credit score, and your currently outstanding liabilities (which will figure into your DTI later on). There's not a whole lot to them from your perspective, the key factors are the credit score (impacts your program eligibility and what your interest rate will be) and the listing of your liabilities. The credit report should contain all of your revolving debts (credit cards), installment, mortgages, auto leases, etc. It'll tell your bank the current balance, allow credit line, minimum payment, and payment history. The AUS system will analyze the credit report and spit out a recommendation. Assuming the recommendation is acceptable, then congratulations you've gotten past the first major hurdle of the loan approval process. DO NOT OPEN NEW ACCOUNTS OR MAKE ANY MAJOR PURCHASES WHILE THE LOAN IS IN PROCESS, PARTICULARLY IF YOUR DTI RATIOS ARE HIGH This should be a common sense thing, but borrowers do it all the time. I know you're excited for your new home and want to go out and buy all new furniture and a new car and a drat aircraft carrier or something equally absurd while the application is still in process. Don't do it. Credit reports are only good for 90 days, and there are a large number of reasons your bank may re-pull credit on you mid-loan application (we're required to on a certain percentage of loans for quality control purposes). Loans get denied all the time because the applicant took out a new auto loan or racked up a huge balance on their credit cards after the initial credit pull, which was subsequently discovered on a new credit report and they no longer qualified with the new debts. It's a dumb, easily avoidable problem. Income W2 Wage Earners: You'll want to have your current year to date pay stub, and the last two years of W2s handy. An important thing to note is that different types of income have varying time frame requirements. If you're able to qualify using your base salary/hourly rate then just your YTD pay stub will be enough (and probably a W2). If you receive bonus, overtime, or commission AND you need that income in order to qualify for a loan then you have to document a 2 year history of receiving that type of income. To do this your processor will probably need to have your employer complete a written verification of employment to document how much of each type of income you've received over the last 2 years and your income will be calculated appropriately. So if you've just started receiving a totally awesome quarterly bonus, too bad you can't use that as income. Also, for you commissioned goons if >25% of your total income is commission then you'll get treated as a self employed borrower essentially, in which case you're also going to need to provide tax returns. Self Employed: Your income is almost always going to be calculated using your tax returns. Some banks may allow for YTD profit and loss statements as well to help calculate income, but not a lot. You'll want to have your two most recent years tax returns (all filed schedules) handy. If you run an S Corp or similar company where you pay yourself W2 wages you'll want to have the W2s handy as well. You may only need 1 year depending on your AUS response, but again HAVE two years handy but ONLY PROVIDE what you are asked for. For those of you on the fence as to whether you'll be considered self employed or not, ask yourself the following: Does my employer report my earnings on a form 1099 instead of W2? Does commission represent >25% of my earnings? Do I file Schedule C, receive K-1s, or any of the business tax return schedules? If you answered Yes to any, you're self employed. There are other situations that can make you self employed as well, but they're going to be somewhat lender specific. Your bank will also need to verify your employment. For W2 earners this is usually pretty easy, they'll call the employer and speak to payroll/HR and confirm that you're still employed and probably start date and some other easy things. If your company isn't large enough to have a dedicated HR/payroll department then your direct manager, company owner, executive, or some other authoritative person can do it as well. It's probably a good idea to find out from your employer how they do it - some companies use outside vendors such as the Work Number, others require that the employee initiate the request and they will contact the lender directly, that sort of thing. It can definitely save your bank time and help avoid unnecessary delays if we know exactly who to contact to get it done. Self employed borrowers also have to verify employment, but this can be a bit trickier. They generally need to prove the business exists, but different banks have different standards for what is required. Ask your broker what their lender will want to see and act accordingly. On a related note, unless it's completely unavoidable don't quit your job, retire, or anything stupid like that during the application either. We're going to be verifying your employment at the last possible instant, and if you no longer have income then you've got problems. If you do have to switch jobs for whatever reason, be prepared to wait a while to proceed as your lender will probably want to see a few pay stubs come through before they will recalculate your income. Assets Be prepared with two months of current statements or the most recent quarterly statement, depending on type of account. Again, only provide what is required though. Your assets will fall into two basic categories: liquid and reserves. Liquid assets are basically your standard checking and savings accounts, money market funds, most kinds of CDs, etc. Basically depository accounts where you have immediate access to the funds. Only liquid assets may be used to cover your down payment and assorted closing costs. Reserve assets are things like your stocks and bonds, 401k, IRA, etc. There is typically a percentage modifier applied to these types of accounts (60-70% in most cases) that determines how much you are able to qualify with. For example if you have $100,000 in your 401k you are allowed to “use” $60,000 of this to qualify. If you need to use a reserve account to cover a portion of your down payment then you will need to liquidate the funds from that account and transfer them to a checking/savings account of some sort. The entire liquidation and transfer should be paper trailed. How much in the way of assets you'll need to document is mostly determined by the loan program you have selected as well as your AUS response. Once your LO/processor has figured out how much you need to document, you'll want to provide them with enough assets to cover it and nothing more. For example, your down payment and closing costs are going to be $25,000 and your AUS is additionally asking for another $5,000 reserves. That $25k will need to be verified via liquid sources (checking/savings) but the other $5k can be your 401k or whatever (remember that you can only use a portion of the total account balance though). If, on the other hand, you have a checking account with $40k in it then just provide that since it'll cover both your liquid and reserves. IMPORTANT NOTES: - Large deposits into accounts need to be explained and documented. What qualifies as a “large” deposit will depend on your total income, whether it appears to be a regular deposit, if you receive direct deposit, how strict your lender is, etc. Try to look at your bank statement from the perspective of knowing only “I know the guy makes $XXX/month” and see what jumps out at you as “where'd that come from?” Your processor/LO should be able to let you know exactly what you'll need for the deposits if you let them know what the source is. - You've been considering buying for a long time (or you better have been considering for a long time, read the thread if you haven't), so you should have plenty of time and forewarning to remember to hang on to the supporting documentation for any large deposits you may have to make, given the above. Keep copies of your deposit slips, check images, etc. - DON'T MOVE MONEY BETWEEN ACCOUNTS IF YOU CAN AVOID IT. A huge chunk of large deposit issues on asset statements, in my experience, is overly eager borrowers moving their money around so they can consolidate it into a single account to wire out/get a cashier's check from. DO THIS AFTER THE BANK HAS VERIFIED ALL YOUR STATEMENTS. A few days before settlement is when this sort of thing should occur, not in the middle getting your documentation. Your processor and underwriter will have to go through every asset statement and make sure that the deposits/withdrawals are all explained, and if anything isn't fully documented or explained then they'll be sending you off to get more documentation. - The exception to the above is, as previously mentioned, when you're liquidating a reserve account for cash to close. You'll want to provide the relevant source statement, proof of the liquidation, and proof of deposit into the liquid account. Try to keep this to a short time frame as well, a $10k withdrawal and then deposit the next day is a lot easier to accept than “I bought this cashier's check 3 months ago and just deposited it today.” - Provide ALL pages to every asset statement. Yes, ALL PAGES. You and I both know that the last page of your Bank of America statement is that stupid “This Page Left Intentionally Blank” page. I don't care, provide it. This actually goes for every document you provide. All pages, all the time. - Don't black out anything on the statement. Lenders hate blacked out documentation, even if it's inconsequential crap. I don't care that it's just your account number and everything else is visible, my bank won't accept it and many others won't either. Appraisal I won't go into a lot of detail here since you don't have much say or input when it comes to your appraisal, but I'll briefly describe the process and what factors are important for an appraisal to be acceptable. Firstly, your broker/lender will order the appraisal through either an appraisal management company or appraisal company directly. They're usually in the neighborhood of $300-$400 depending on locale, complexity of the property, and additional factors. The appraiser will come out, look over the property, take measurements, take grainy/poorly lit photos, etc. A few days later you'll have a 30-40 page report going into great detail why the home you bought 2 years ago for $400k is now worth $270k (sucker). How do they determine the value of the property? They look for similar properties in the neighborhood that have sold recently (also known as comparables or “comps”) and after adjusting for marketable differences in the properties come up with an opinion of value. Ideally, comps will be within 1 mile of the subject property, dated within 6 months prior to the date of the appraisal, and feature comps that are similar to the subject home in terms of square footage, condition, quality, amenities (pool, deck, sunroom, etc), room count, and other factors that influence market appeal. Incidentally, this is why foreclosures and short sales impact the value of your home so greatly. Foreclosures in particular tend to sell for greatly below market value as the bank is a motivated seller and wants to get rid of the property as quickly as possible. When it sells, then it becomes a potentially usable comparable which can drag down the value of your home accordingly. Appraisers generally do note when they have used foreclosures and try to adjust accordingly, but it still has a net negative impact. I can go into more detail about how comping works (voodoo mainly) if anyone is interested, but it's pretty dry. The short version is they're looking for recent sales nearby your home that have similar feature sets and market appeal, then look at what they sold for and your value is probably somewhere in the middle. General Tips - Allow for more time than you think you're going to need, particularly on purchases (and in your purchase contract in particular). There are a LOT of parties to this transaction, and a screw up on any of their parts can cause delays throughout the whole loan process and most of those delays are things that YOU ultimately are going to pay for. Things get held up in underwriting, title companies run into snags getting title issues resolved, sellers go out of town, you go out of town, whatever. You'd be surprised how many times I get screamed at by loan officers/processors to do something now because “my borrowers are at the signing table!” This is almost always due to poor planning foresight on their part, but that's neither here nor there. - As a corollary to the above, do NOT go out of town anytime around your anticipated settlement date (if you can avoid it). - Avoid faxing documentation if you can, things like purchase agreements (tiny loving text most of the time), photo IDs, overly colorful pay stubs and asset statements can be hard to read after getting faxed around a bunch. If you can access it on your computer, use PDF printer software and send your LO/processor a PDF of whatever you've got, can help immensely with having to resubmit documents multiple times. - Again, and I really can't stress this enough, Provide only the documentation that is requested from you by your broker and nothing more If I only need 1 year of tax returns and you give me 2, then I can't ignore that second year and have to take it into account. At best, giving more than is required is going to create extra unnecessary work for your broker/lender, and at worst it can result in your loan being denied. - Ask questions of your LO/processor. If there's anything you're confused about or you're not sure what you need to provide, ask them. They should be more than happy to answer, and given they only get paid if your loan closes it's generally in their best interest to help you as much as possible. I'll write up some more when I have time if people are interested. If you have specific topics you're curious about I'll try to address them if I can, though keep in mind I work for the bank and not the broker so things like “what should I look for in a broker” or “is this a reasonable quote for fees” aren't really issues I can answer because I don't know or don't deal with it. And my idea of a good broker (one who accepts denials without complaint and never fights conditions no matter how unreasonable) is basically the exact opposite of what you guys would want in a broker  Edits: Proof reading on the fly is the only way to do things. Captain Windex fucked around with this message at 07:03 on Nov 4, 2011 |
|
#
¿
Nov 4, 2011 00:35
|
|
|
OneTruePecos posted:The only nit I see to pick in a damned good post. It should be Good Faith Estimate of course. Whoops. Nothing to see here
|
|
#
¿
Nov 4, 2011 03:17
|
|
|
JimTheSarcastic posted:I'm not a lawyer, and I don't know about the criminal/fraud issues, but I do know real estate title, since that's my job. The take-home message of what I wrote below is that it's bullshit that your girlfriend has to convey her share to her parents.... Might've gotten her to sign a power of attorney, but since those should be notarized as well I'm not sure how they managed to get the loan into her name without some serious fraud going on. PoliSciGirl posted:Is it a bad idea to contact the mortgage loan processor and ask if she can make the date we asked for? She told us that the date will have to be changed, but we've already made about 5 different appointments the day of closing. Can't hurt to ask. Usually scheduling would revolve around when you can set an appointment with your settlement agent, notary, and the sellers. Other than having to meet your lock deadline or running up against some other time sensitive issue I don't think your broker should care that much - usually the LO/processor isn't even present at closing.
|
|
#
¿
Nov 9, 2011 04:05
|
|
|
JimTheSarcastic posted:If they got her to sign a POA that would allow them to take out a mortgage in her name, then they wouldn't have told her she needs to convey her property to them, since they would have the authority to do that as well. Good point. Either way it's a lovely situation.
|
|
#
¿
Nov 9, 2011 04:38
|
|
|
FCKGW posted:It's always worth it to buy a house outright if possible. Some will say that with interest rates this low you could make more money in the long run investing your funds elsewhere, but then again you can't foreclose on a paid off house. This, and you'll probably have trouble finding a broker and a bank willing to
|
|
#
¿
Nov 13, 2011 10:45
|
|
|
CatchrNdRy posted:Soo..apparently the government's HARP (Homeowners Assistance and Recovery Program) II is going to be rolled out December 1st, for you way underwater (ie FL, AZ, NV) Fannie/Freddie backed, non-ARM types with a good payment history. The manually underwritten version of the products will be coming out soon, but the version that gets run through Fannie and Freddie's automated underwriting systems won't be available until sometime in March. You're only eligible to do the manually underwritten version through your current lender and not all lenders are participating in the program so you may be SOL for refinancing until the AUS updates roll out in March.
|
|
#
¿
Nov 17, 2011 06:50
|
|
|
senor punk posted:401k/pension loans I'd say you should disclose that the 401k/pension loan is going to be an intended source of your down payment to your LO/processor when you start the application process, but before actually pulling the trigger on doing it. They can check with the bank for you how the lender treats those types of loans and whether it needs to be included in the debt ratios, if they don't already know. I've only run into loans where the borrower did that a couple times so your broker may not be overly familiar with them. Since the loan is secured against an asset (your 401k/pension) it is an eligible source of funds for conventional and I would imagine government as well, though since you mentioned 80% I assume you're planning to go Fannie/Freddie. The big question is whether you will have to include the payment on that loan in your debt ratios and, assuming you do, whether that will push your DTI too high for loan approval. Fannie Mae, for example, does not require that the payment on this type of loan be included in your ratios but a lot of lenders will include it anyway per their policies. I think Freddie is the same, but gently caress Freddie as previously mentioned. If your DTI is low either way then it doesn't really matter. Assuming you're good to go, you'll need to provide a statement for the 401k/pension account, terms of the loan, and proof of the loan being taken out and deposited into your checking/savings account. You'll also want to keep in mind that the value of the 401k/pension will be reduced accordingly if you also need to use the account as part of your financial reserves (see page 101 of the thread for about assets). So if you have $100k in the account and you take a $40k loan, you'll have $60k as far as the bank is concerned which will then be hit with a 60% modifier for a total of $36k being usable to qualify as reserves.
|
|
#
¿
Nov 27, 2011 19:52
|
|
|
Captain Windex posted:The manually underwritten version of the products will be coming out soon, but the version that gets run through Fannie and Freddie's automated underwriting systems won't be available until sometime in March. You're only eligible to do the manually underwritten version through your current lender and not all lenders are participating in the program so you may be SOL for refinancing until the AUS updates roll out in March. Fannie is still not going to be until March at this time. Not sure which investor holds your loan? Check out the tools located at: Fannie: http://www.fanniemae.com/loanlookup/ Freddie: https://ww3.freddiemac.com/corporate/ It looks like the loan cutoffs remain the same, so your existing loan had to have been sold to Fannie/Freddie prior to June 1st, 2009 to be eligible to refi under the new programs. The updated Freddie underwriting guidelines look less needlessly obnoxious as well, so  for me
Captain Windex fucked around with this message at 06:48 on Dec 2, 2011 |
|
#
¿
Nov 30, 2011 06:49
|
|
|
Gothmog1065 posted:Can someone explain to me why an appraiser needs your purchase contract to see the price you're wanting to buy the house for? Aren't they supposed to go out, do their measurements, take pictures, pull comps and give a price on the value of the house? Appraisal reports are in a fairly standardized format that requires this information on purchases, and the USPAP standards require them to review it. They're not just looking at the purchase price. Sales concessions and some clauses in contracts are considered to have an impact on the value of the home. There may also be information disclosed in the contract regarding the condition of the house that would not be obvious/normally observable to an appraiser that impacts the salability/quality/condition of the home which can have a significant impact on the value (mold or termites in hard to reach places, lead paint on the walls, the septic tank is filled with explosives, etc.). A fair number of appraisals do come in conveniently close to the purchase price in the contract but how many of those are lazy appraisers versus buyers/sellers that did a good job of scoping out the neighborhood and setting a realistic price is hard to say. Plenty of appraisals come in much higher (rarely) or lower (frequently) so it's not something that occurs on every report. Lenders also often used Automated Valuation Models (AVMs) that give a secondary opinion of value based on recent sales - they're a lot more basic analysis (mainly just room count, square footage, and a few other factors) but they can help show when value is being pushed a lot by the appraiser.
|
|
#
¿
Nov 30, 2011 18:11
|
|
|
cstine posted:The worst bank in the country strikes again!  "So it looks like your short sale approval letter is expired, we're going to need an updated letter" "......gently caress"So glad I'm not on the broker side of things, poor bastards.
|
|
#
¿
Dec 13, 2011 07:18
|
|
|
|
| # ¿ May 15, 2024 03:31 |
|
|
giundy posted:Homepath seems to be a good avenue. Assuming the same down payment, I'd save on PMI and loan insurance. The downside is having to go through PNC for financing instead of many of the highly recommended local savings and loans. I suspect the previous bid on the house fell through since there's some weather damage a window and trim on the front of the house, which would have complicated the FHA inspection but is not required with HomePath. Any words of advice on shopping lenders? There's no MI, but the pricing adjustments for Homepath loans >80% are quite high and a higher interest rate hits you over the life of the loan, whereas the cost of MI typically falls off once you hit 78% equity. This is not to say Homepath is a bad idea necessarily, just something to consider when running the numbers of if you're truly saving over having a loan with MI. The main advantage is not having to pay for an appraisal and that you don't have to deal with the MI company overlays for qualification. While not every lender participates in Homepath that doesn't necessarily mean that your local credit union or whatever can't do it for you. A very large portion of local credit unions, S&Ls, whatever act as correspondents and sell the loans they originate to another, larger lender. Generally speaking, originating a Homepath loan is no different that a standard loan and in fact it's probably easier since you don't have to deal with an appraisal and everything else is essentially identical. As far as shopping around, I can't give much in the way of advice other than while it's important to shop around try to avoid applying with a large number of lenders. Each one is likely going to pull your credit and when you finally select a lender to go through the bank will have likely have the most recent report which will have all of the previous credit inquiries listed. Large numbers of recent inquiries is a huge red flag to your underwriter, and many lenders will decline your loan application if they consider it excessive.
|
|
#
¿
Jan 7, 2012 08:00
|
|