Forum
« Common Charges Increase on Coop The end of the America's Banking system. »
September 29, 2008
Mortgage Advice
Is it still possible to buy with 10% or 15% down.
We entered a contract to buy a house from an estate for 500K. During inspection some structural damage was uncovered, and we were able to nagotiate an additional 15% discount for a new price of $425K. (this is downtown Jersey City - not Brooklyn)
However to do the work(min 30K), we would rather not put down 20%.
We have a mortage committment with 20% down at the higher price.
We went back to the bank and asked to put down 10% or 15% instead and even the loan oficer foresaw no problem. However mortgage insurer won't insure our loan (pmi) because our credit score is below 720 (by a few points).
Before we start shopping around again, are we going to encounter this everyone. We are going to purchase this property regardless, but we would be much more comfortable not utilizing all our liquid assets to do so.
So am i just going to waste my time by shopping around.
Thank you.
Comments
There are special loans out there for that type of situation.
I am in NO WAY endorsing Wells Fargo or this product but I know that they have a purchase/renovate combined loan package that may at least be worth checking out.
https://www.wellsfargo.com/mortgage/buy/loans/descriptions/renovation
Posted by: TownhouseLady at September 29, 2008 11:18 AM
Have you considered a 203K FHA mortgage.??
It allows you to borrow additional monies for construction, and allows for a lower credeit score.
Just an idea.
Howard
Posted by: howrealnyc at September 29, 2008 12:00 PM
We got a mortgage that included purchase money and reno costs from Webster Bank. Also, a good mortgage broker wil know better who's out there than you having to canvass all the banks. Worth at least consulting. Make sure you are prepared for overruns.
Posted by: slopefarm at September 29, 2008 12:16 PM
What part of Jersey City? I love Downtown Jersey City and believe if you are looking for a 10 percent down on this type of loan you can try Wells Fargo. There is a Wells Home Loan location on Washington and 4th St in Hoboken. Try it...
Posted by: HOBOKENROCKS at September 29, 2008 12:23 PM
I'm in downtown JC, now what exactly happened? The credit score shouldn't be an issue if you are just under 720 more likely the specific PMI company has JC as a declining market as much of Brooklyn as well. We just had a loan cut to 85% from 90% because of declining market and MI, even though the program had the loan approved at 90%. Some MI companies are more stringent than others. One MI company will be fine with the area and another will not like it and cut LTV's 5% across the board. You can try speaking with your lender to see if they can approach another MI company. I'll tell you right now that RMIC is EXTREMELY tough right now and cutting LTV's. We have one that had no problem with the declining market but they didn't like the client's income so that ended up being a dead-end.
The 203k program is available but it has a lot of caveats on what kind of work you can and can't do with the money and you still have to pay the FHA upfront and monthly MI regardless of how much you put down and it takes forever.
I would try to find out exactly what the problem is because there shouldn’t be an issue if you still have a score over 680.
Posted by: Adam Dahill at September 29, 2008 3:04 PM
I think this is the way things are working right now. We are in the same situation and have been running around from bank to bank - looking for a bank that can get PMI with 10% down. Both of us have credit over 750 so I doubt that credit is the problem. It's just that the PMI companies are scared to put in 90%. You may be stuck having to put the extra money down. We are trying a credit union right now- I'll update you if the PMI goes through for 90%. Good luck to you.
Posted by: Dappledo at September 29, 2008 4:12 PM
Do nothing this week. Banks aren't even lending to each other! You will waste your time and have the black mark of declined application.
Posted by: b_green5 at September 29, 2008 9:38 PM
Souds like you would fit perfectly under the FHA 203k. We can finance 97% plus renovation costs. Or you can finance 85% or 90% and do a conventional loan. We have loans available with no PMI so you wll have no issues with any MI companies. On conventional loans, we go down to as low as 620 fico but of course your rate wouldnt be as good as someone who has a 720+. sunny_hong@countrywide.com
Posted by: shong1 at September 29, 2008 11:58 PM
Thanks everybody! Just a month ago this would have been a none issue we're told.
Two reasons they can't insure the loan:
1) credit score of 704 too low
2) area in distressed market (and just put on the list two weeks)
PS: out of desperation (we're living with my mother in her 1 bed apartment) we told the bank we would do the 20% down.
They are now having issues lending to us even with the traditional 80%.
So yes, we're doing nothing this week. In light of yesterday's developments putting all our liquid assets into a home does not seem like a good ideal. If we can make it happen with 10% -15% down great...I imagine there will be more bargains coming up.
Posted by: formerPH at September 30, 2008 10:56 AM
Are you sure those are the only 2 reasons? Does your income qualify you for the mortgage and all other monthly liabilities? No matter how distressed the area is , that shouldnt be the reason your loan is being denied with a 704 credit. The only thing I can think of is that your debt to income ratio is too high. sunny_hong@countrywide.com
Posted by: shong1 at September 30, 2008 9:19 PM
Post a comment
Please be patient while your comment is published. It may take a moment.