Anyone out there in the mortgage business?

Discussion in 'General Discussion' started by jmason, Sep 30, 2009.

  1. jmason

    jmason Well-Known Member

    Messages:
    1,527
    Joined:
    Feb 6, 2008
    I figure you guys are my best bet at any real help on this one.

    This spring my wife is going to get us a mortgage. I want her to apply by herself if possible as she would be a first time home buyer. I have already bought homes before(a few years ago). We have 22 acres we own free and clear and would like to put a house on it. Her credit score and mine are very good we check them every year.Is there anyone in the business that could help us with some "insider info" that would get us a better rate or terms?
     
  2. Broz

    Broz Well-Known Member

    Messages:
    8,637
    Joined:
    Feb 3, 2007
    I am not a lender but have been involved with realestate for a long time. The last properties I sold I noticed the underwriters were looking at the borrowers " Debt to Income Ratio" more than the credit score. Not to say that the beacon scope is not important, infact they now require a higher score for the better rates. But I seen people with great scores and record of payments turned down because of their debt ratio. So I would look at reducing any debt she can prior to application. Don't close out C cards, just pay them of or down to 30% 0r less of their limit. This will look best on your credit file.

    Again, I am no professional lender but have been involved in getting buyers financed on several homes in recent years.

    Jeff
     

  3. jmason

    jmason Well-Known Member

    Messages:
    1,527
    Joined:
    Feb 6, 2008
    when you say pay them down to 30% does that mean only 30% of the available credit is used or you have 30% left available? We have only one card together and I don't think it's anywhere near the limit.

    Do you know if she were required to have me on the loan too, would it blow her chance for the first time home buyer incentives?
     
    Last edited: Sep 30, 2009
  4. Broz

    Broz Well-Known Member

    Messages:
    8,637
    Joined:
    Feb 3, 2007
    Yes, down to 30% of the cards total limit or less. Zero ballance is even better if you can do it.

    As for the question about the two of you or just one. It may depend on if you file joint tax returns or not. And state laws may come into play as well. But in many states she could buy it her self as many go by the " one to buy , two to sell " when concerning realestate with married couples.

    .
     
  5. edge

    edge Well-Known Member

    Messages:
    1,088
    Joined:
    Nov 4, 2005
    I think that unless you are putting a manufactured home on the site that you will need a construction loan that will convert to a mortgage.
    Most construction loans pay out in steps, such as after the foundation, well and septic are inspected. Then after the framing is weather tight. Then a final payment after the final inspection ( with or without a hold back ).
    This may convert to a mortgage, or your mortgage is contingent on a CO.

    You may have a problem converting the land value into the mortgage since it probably won't be viewed as an arms-length transaction.

    If you belong to a Credit Union or professional org check there first for special deals they offer members.
    Since I suspect that you will need the construction loan, that normally means a local bank....unless you have a great relationship don't expect the best rates, but you may be able to refinance shortly after closing.
    If you have enough equity you might be able to get a second mortgage and use that to pay off the construction loan, which then becomes a first mortgage.

    edge.
     
  6. jmason

    jmason Well-Known Member

    Messages:
    1,527
    Joined:
    Feb 6, 2008
    We are doing a manufactured home, but my intention is to have a basement and garage (attached) done as well but not by all the same people. I don't know if that throws me/her/us into a construction loan or not. What is an "arms length transaction"?
     
  7. edge

    edge Well-Known Member

    Messages:
    1,088
    Joined:
    Nov 4, 2005
    Selling property to yourself or to a relative will almost always be questioned.

    You will need to have an appraisal of the properties worth, perhaps two or three by disinterested companies to determine that your value of the land is fair and at a price that a "stranger" would pay for it.

    Selling it to yourself too cheaply and you don't need to pay taxes on it. Sell it too high and the mortgage is worth less than the bank thinks it is. ( like all of the fraudulent appraisals done in the last 10 years during the housing bubble )

    edge.

    I have been out of the mortgage business for about 15 years so really can't give advice on current business practices.
     
  8. jmason

    jmason Well-Known Member

    Messages:
    1,527
    Joined:
    Feb 6, 2008
    I'm a little dense so bear with me. We already own the land why would we sell it to ourselves?
     
  9. edge

    edge Well-Known Member

    Messages:
    1,088
    Joined:
    Nov 4, 2005

    Are you going to mortgage the land with the house? If so, then what price have you put on it? Is it in YOUR name, your WIFE, or BOTH?

    If it is in YOUR name, then she is buying it from you or you will have to be on the mortgage too unless you are leasing it?

    If the property is leased then who decides a fair price?

    Otherwise how does she get this property...gift?

    edge.
     
  10. jmason

    jmason Well-Known Member

    Messages:
    1,527
    Joined:
    Feb 6, 2008
    I gotcha now.lightbulb It is in my name only. I guess the plan was to use the land as collateral on the loan which drags me into it unless I can give it to her somehow without screwing all this up. It also probably ruins any chance of better rates for her as a FTHB unless I qualify somehow since my other homes were purchased many moons ago.
     
  11. rain164845

    rain164845 Active Member

    Messages:
    33
    Joined:
    Apr 2, 2008
    In NC, since she is your wife, she has interest in the property as well. She would not qualify for FTHB. Additionally you would have to sign the deed. There would be no sale between you and her.
    Joe