Which type loan should we be seeking?
We have been trying to get a mortgage since last October, but maybe we should be seeking some other type of loan? Here’s the situation.
The wife and I purchased a single family foreclosure June ’06 for $37,500 cash. We own it free and clear, no liens on it. It is our primary residence.
We were able to do some work to it over the last few months with the little reserves we had on hand. But it needs more work and in order to do that we needed to get some working capital. Plus we want to pay off 3 other loans we have.
Which are:
Auto loan at $16k balance @ 20% apr $386 monthly
LOC 20k balance @ 25% apr $424 monthly
CC $7800 balance @ $150 monthly
Total $43,800 $960 monthly.
We went to our local bank where we have our checking and savings accounts and they said they couldn’t help us without at least a 620 score. They do have a sub-prime program for borrowers “like us” but you have to have owned the property for at least 12 months. We learned what the term “seasoning” meant in the mortgage industry.
I went to Lending Tree (or something similar) and got 3 potential mortgage offers. After talking to all 3 we went with the one who offered us the best deal. (of course) We got the paper work together and ordered the appraisal ($300). The appraisal comes back at $64,500. We were told we should have a closing date by December 6th or very soon after since that will be the 6 month seasoning date. It is now the week before xmas. The date comes and instead of closing we were told it was denied. Lack of seasoning and low score we are told. But the “good” news is he sent all our information over to another broker who can get us through cause they don’t care about seasoning. And he can offer us all the same terms and even increase our LTV from 85% to 95%. EXCELLENT!!
This new broker tells us this loan should be no problem at all. And if it were not for everyone working with a skeleton crew due to the holidays, he would be able to get this closed within a week.
We are told we will need another appraisal since the one done just 2 weeks ago is not in their name. Luckily the appraiser cuts us some slack and only charges us $150.00.
It is now the first week of January. We are told once they get the appraisal it should only take about 72 hours to get a clear to close. They got that appraisal over a week ago. Now they tell us underwriting is really busy and they are still working on it. Have not heard from them in over a week.
(I won’t even get into telling you about another broker I talked to on Monday who told me how easy this loan will be to do. I have not heard back from him despite promising me he will call me either way)
This morning I decide to talk to a lender instead of a broker. Countrywide is who we had our previous mortgage through. He pulls our scores and tells me he is looking at a 620 for the wife. Perfect! He can do 95% LTV, no prepay, fixed 2 years, 12.25%. Not the best, but beggars can’t be choosers. A $642 monthly payment beats a $960 monthly payment (the 3 loans above we want to pay off with the loan). Better interest rate then the ones on the loans we will be paying off. Plus tax deductible. He will even take $150 off his fees to cover the cost of the appraisal since it will be the 3rd in about a month. (yeah ok whatever).
He is saying he should have a closing date by next week. I will believe it when I see it.
I am just trying to figure out why we can’t get this done. At first I thought it was our scores and/or lack of seasoning. Now I am thinking it might be because a $61k loan is probably not worth the time it takes to write. Despite how much sense it may make.
I have not spent to much time inquiring about a HELOC. It would seem to make sense since we have $64500 worth of equity. But I seem to remember talking to someone about a HELOC at some point and was told it was not an option for some reason. I forget now. Maybe I should find out what that reason is huh?
Anyway sorry for the long post. Just figure sometimes you put it out there and someone might have some suggestions.
You just never know.
Thanks