Posted on: 13th Aug, 2009 09:27 pm
Just looking for an opinion.
Here we go..
I have 82500/year salary (2008 and 2007 show 100k)
My wife has S-Corp and last year (2008) she had a baby so there was only 6 productive month with low income. Currently she works at $30/hr as contractor with about 1700hr/year (there is a letter from employer)
Our current house was bought in 2005 for 206k, currently we have 151k remaining in principal. We are not going to sell it, plan for rent.
We have no other loans. We have few active credit cards with average balances about 3k that we pay off regularly, it's just a tool.
We are under contract for new house for $415k.
We planning to put 10% down.
Our savings account has $39
Checking account has $6k
I'm borrowing $10k cash from my sister to pay for appraisal, etc so I can build up my checking before closing.
My credit score reported: 800-794-782
Wifes: 790-771-725
One lender gave us estimate for 5.625, another lender 5.25. Closing fees about the same.
What should I expect today? Is it easy file?
Here we go..
I have 82500/year salary (2008 and 2007 show 100k)
My wife has S-Corp and last year (2008) she had a baby so there was only 6 productive month with low income. Currently she works at $30/hr as contractor with about 1700hr/year (there is a letter from employer)
Our current house was bought in 2005 for 206k, currently we have 151k remaining in principal. We are not going to sell it, plan for rent.
We have no other loans. We have few active credit cards with average balances about 3k that we pay off regularly, it's just a tool.
We are under contract for new house for $415k.
We planning to put 10% down.
Our savings account has $39
Checking account has $6k
I'm borrowing $10k cash from my sister to pay for appraisal, etc so I can build up my checking before closing.
My credit score reported: 800-794-782
Wifes: 790-771-725
One lender gave us estimate for 5.625, another lender 5.25. Closing fees about the same.
What should I expect today? Is it easy file?
I'm applying for conventional fixed rate 30yr loan with no bs like prepayment fees
Hi guest1,
It looks like getting a loan will not be an issue for you. You and your wife have got excellent credit scores. While most of the borrowers are struggling to get a loan due to bad credit, your scores are good enough to qualify for any type of loan, be it an FHA or a conventional loan.
You have got good income as well. Your wife may not have good income at this point in time, but as you are signing on the loan along with her, she too can qualify for the loan as co-borrower. A 10% down payment is quite good. The rates you have been offered are not bad at all. But, if you can pay a few discount points upfront, apart from the down payment, it will lower your interest rates further.
Nevertheless, will you be able to afford two mortgages in this economy? I know you are going to rent it out. But will the rent be enough for you to cover the existing mortgage payment? In case, the renter leaves the property or fails to pay on time, are you ready to pay out-of-pocket towards the loan and at the same time be current on the new loan?
It looks like getting a loan will not be an issue for you. You and your wife have got excellent credit scores. While most of the borrowers are struggling to get a loan due to bad credit, your scores are good enough to qualify for any type of loan, be it an FHA or a conventional loan.
You have got good income as well. Your wife may not have good income at this point in time, but as you are signing on the loan along with her, she too can qualify for the loan as co-borrower. A 10% down payment is quite good. The rates you have been offered are not bad at all. But, if you can pay a few discount points upfront, apart from the down payment, it will lower your interest rates further.
Nevertheless, will you be able to afford two mortgages in this economy? I know you are going to rent it out. But will the rent be enough for you to cover the existing mortgage payment? In case, the renter leaves the property or fails to pay on time, are you ready to pay out-of-pocket towards the loan and at the same time be current on the new loan?
if your lender has reviewed your information and provided rate quotes that appear to be quite good, why are you tossing the question to our community? i ask that because if i were you, i'd be quite pleased with the quote and move forward accordingly.
is there something missing here? jenkin has brought up a very good question concerning your proposed rental. is that going to work out in your favor, or is that original lender questioning it as well?
it's hard to comment with positive answers because there's a little bit missing here.
is there something missing here? jenkin has brought up a very good question concerning your proposed rental. is that going to work out in your favor, or is that original lender questioning it as well?
it's hard to comment with positive answers because there's a little bit missing here.
Regarding 2 mortgages. I am able to live with 2 mortgages with little money to spare. If it will be rented then I will have to put out about $300/mo out of pocket which is not bad at all. Obviously the fact that my wife has S-Corp(write offs) makes lenders think differently about this.
I have 2 lenders working with me right now. 1 gave me 5.625 and another gave me 5.25 with same closing costs.
That's my dilemma. It's a big difference. If it was .125 difference I would go with a guy who did my mortgage before. But this is very big difference to me.
Thats why I want advice. If 5.25 is real rate (not teaser) then I would say that my broker trying to take advantage of me since I did it 2 times before and didn't shop around. If 5.25 is not real in my situation then I'd rather stick with my broker and avoid surprises.
My current broker says that I need to get renter before closing (with contract and downpayment) and have 30% of equity in my current house. So, I will have to put some more money down my current house. Does that make sense? Why second broker didn't tell me about that?
I have 2 lenders working with me right now. 1 gave me 5.625 and another gave me 5.25 with same closing costs.
That's my dilemma. It's a big difference. If it was .125 difference I would go with a guy who did my mortgage before. But this is very big difference to me.
Thats why I want advice. If 5.25 is real rate (not teaser) then I would say that my broker trying to take advantage of me since I did it 2 times before and didn't shop around. If 5.25 is not real in my situation then I'd rather stick with my broker and avoid surprises.
My current broker says that I need to get renter before closing (with contract and downpayment) and have 30% of equity in my current house. So, I will have to put some more money down my current house. Does that make sense? Why second broker didn't tell me about that?
your current broker is correct about the tenant and lease and equity situation.
second broker? who knows why that didn't come up.
i am of the opinion that working with someone you know and trust is more important than anything else.
second broker? who knows why that didn't come up.
i am of the opinion that working with someone you know and trust is more important than anything else.
I'm with you 100% on working with somebody I know. But in this case it will cost me $100/mo for 30 years. Don't you think it's too much? Thats a reason why I started to shop around and ask for opinions.
Does my situation dictate higher rate or I get rate based on my score only?
Does my situation dictate higher rate or I get rate based on my score only?
you didn't mention your score. i presume it's adequately high enough to get you a decent rate. and honestly i don't know why you couldn't get a 5.25% rate in either place today...maybe you got quoted rates when they were up a few days ago (?) - is that a possibility? keep checking in with them...and i have to agree that $100 a month is a lot of difference.
My scores is up there in first message. Yes, I was quoted in beginning of the week.. And got lower quote yesterday
sorry..i forgot about your original post. whatever you're looking at you ought to get the best rates available. are the new rates closer to each other?
Just spoke to broker#1(5.625). They said they can't be much more competetive here. Maybe 5.5 today. They explain this in a way that they lock me with less aggresive investor who will not be so picky about my file. They say if they go with 5.25 bank/investor - most likely those will question amounts on my accounts, current house and make deal more complicated. They offered to completely waive Title/Closing fees ($2000) because they can put my file through as refi (I'm customer with 2 mortgages and I never used their free refi program)
So.. This is what I have. Does it sound reasonable? I sure want deal to happen.
Second guy (5.25) promised to complete DU today and do underwriting before end of next week. Does it sound realistic? At what point I know I'm good with a loan?
So.. This is what I have. Does it sound reasonable? I sure want deal to happen.
Second guy (5.25) promised to complete DU today and do underwriting before end of next week. Does it sound realistic? At what point I know I'm good with a loan?
refi? isn't this a purchase? "less aggressive investor who will not be so picky"? i don't understand those reference points. is this lender #1 a real lender? these sound to me like excuses, not anything else. i don't know...doesn't make sense to me.
doing du takes 2 minutes, so that's no promise; an underwrite in less than a week is reasonable. but i don't get that first guy's promises to you at all.
doing du takes 2 minutes, so that's no promise; an underwrite in less than a week is reasonable. but i don't get that first guy's promises to you at all.
first guy is a mortgage company. they lend money themselves and then sell packages to banks. i understand maybe he is trying to please me by paying for closing but he is wording it as so i can use their free refinance to process my new mortgage. i have existing mortgage through them which is free for refi which i never used so he says i can use that for new mortgage. of course, he just gives me some of the money he makes.
they say they locked me for higher rate is because those banks will not look as closely to my file as banks offering best deals. if it doesn't make sense to you then maybe it's just their excuse...
second guy has his fee (750) upfront and he doesn't hide that it's what he makes.
maybe it's a local market too. here in mo we have 5.25 advertised online. but how close is that to what i can get? bank of america advertised 5.25 with 1.25 point yesterday and i got 5.25 gfe with no points from guy #2. is it realistic?
they say they locked me for higher rate is because those banks will not look as closely to my file as banks offering best deals. if it doesn't make sense to you then maybe it's just their excuse...
second guy has his fee (750) upfront and he doesn't hide that it's what he makes.
maybe it's a local market too. here in mo we have 5.25 advertised online. but how close is that to what i can get? bank of america advertised 5.25 with 1.25 point yesterday and i got 5.25 gfe with no points from guy #2. is it realistic?
guy number 1 is afraid to charge you any points, so he bumps the rate up and takes care of a few of your closing costs in the mix. guy number 2 looks more legitimate in terms of trying to get your business and level with you.
going back to guy 1...this "free refi" seems like nonsense to me. what exactly does it entail? and don't bother with those details if it's not truly relevant...i'm just curious.
as for banks looking more closely at you because of a lower rate...what kind of fool is he? that's the most lamebrained excuse i've heard in many years. i pray you aren't really falling for that.
at this point, based on all the foolishness of guy 1 and the seemingly straightforward method of guy 2, i'd suggest you give guy 2 your business. paying a little bit more out of pocket for a lower rate will last you for the life of the loan. your interest expenses will be much less over time at a lower rate, after all.
going back to guy 1...this "free refi" seems like nonsense to me. what exactly does it entail? and don't bother with those details if it's not truly relevant...i'm just curious.
as for banks looking more closely at you because of a lower rate...what kind of fool is he? that's the most lamebrained excuse i've heard in many years. i pray you aren't really falling for that.
at this point, based on all the foolishness of guy 1 and the seemingly straightforward method of guy 2, i'd suggest you give guy 2 your business. paying a little bit more out of pocket for a lower rate will last you for the life of the loan. your interest expenses will be much less over time at a lower rate, after all.
Depending upon what the taxes are on both properties, I would be concerned with the back end debt to income ratio. Unless I am reading something wrong, you are looking at total mortgages of approx $500k with taxes on both....and you will be left with very little in reserves. You do not have a lease (for rent) yet on your current residence so you cannot count that income towards qualifying.
I think this is borderline whether you will qualify.
I think this is borderline whether you will qualify.
George,
>"free refi" seems like nonsense to me. what exactly does it entail?
Covers "800" items and "1100" items. Title and Loan origination fees.
Eric1,
I do have a lease (with deposit and so on). But they told me I need 30% of equity in current residence. I spoke to other broker yesterday and they said I need 25%. So, which is which? 25 or 30? I do have 25+ and can put more if needed.
>"free refi" seems like nonsense to me. what exactly does it entail?
Covers "800" items and "1100" items. Title and Loan origination fees.
Eric1,
I do have a lease (with deposit and so on). But they told me I need 30% of equity in current residence. I spoke to other broker yesterday and they said I need 25%. So, which is which? 25 or 30? I do have 25+ and can put more if needed.