Financing in North Royalton>Question Details

Toni Asta, Home Buyer in North Royalton, OH

we were told that a property which was asking 89,900 was appraised at 79 K by th appraiser & we were denied. Yet the new broker got a new 1 @

Asked by Toni Asta, North Royalton, OH Fri Oct 8, 2010

86? How I am wary...the new broker said we wer denied due to credit yet the scores were in the "low-good" range Then said it was due to being an investment property, but we put dwn. 25% & purchased the max. 4 pts THEN agreed 2 a 51/2 yr. Arm. Then he added the risk was due to the property being a condo! We gave him the previous banks (correct) appraisal 79K & for the asking price of 85 , he said we needed to pay 4 another appraisal @ $900! Which came in at 86K! Never advised to go in lower even when I suggested the obvious! Then when I was asking about future options, I asked if the approval was for this particular home or could we rework it to a general pre-approval if the negotiations were to go under & he said yes...then when the answer came back that we had to pay an additional 5%...We decided that reworking the approval to a general pre-approval would work...and he said that his underwriterss would not give us a loan if we backed out of this loan! & he would not work with us! I am lost!

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Michelle Green’s answer
I would strongly suggest you call another lender and start off fresh with a loan officer that understands what your real estate goals are. It sounds like you would benefit the most from an FHA loan and if this is for investment purposes, I would consider looking into a Home Path program. If this is an investment, you will find condos are much harder to purchase, well, require more investment up front and many can't be purchased with an FHA loan. I'm certain with a knowledgable Realtor, such as myself and team as well as a lender I can help you find a great property. I would be happy to talk more with you, please feel free to call me or e-mail me. All my infromation is available on my profile page. I look forward to hearing from you.
0 votes Thank Flag Link Fri Oct 8, 2010
Hi Toni. Find a real estate attorney to represent you. They aren't as expensive as you think, maybe $400-1000 but worth every penny and very necessary.

If you start this process over again quickly, and make sure that this offer is coming from your attorney with HIS cover sheet, I think this broker will make certain he will not play games or otherwise misquote you, try to get you to buy another appraisal or put his hand into your pocket.

GOOD LUCK.

Scott Miller, Realty Associates, Boca Raton, FL
0 votes Thank Flag Link Fri Oct 8, 2010
This sounds very strange. I have an awesome finance manager at my Howard Hanna office that would love to work with you. He would be more than happy to get you a general preapproval. This service is free of charge and no obligation.

You can find my contact info on my Trulia page if you would like some help.

Sheila Bradford
Howard Hanna
0 votes Thank Flag Link Fri Oct 8, 2010
And people wonder why we require to be licensed. I'm sorry that you had to go through all that. Obviously this loan officer (LO) didn't do his homework prior to you going under contract. You had a few things going against you unfortunately and the loan was structured correctly to begin with.

The first thing to look at here is your credit score. When buying an investment property, you must use conventional underwriting (Fannie Mae or Freddie Mac). Both companies require at least a 680 credit score however, realistically, the bank won't approve you without a 700 score. Guidelines afterall are meant to be changed. So, if your score was below 700, this deal was already dead.

Next is the HVCC factor. The Home Valuation Code of Conduct law requires that no one talk to the appraiser before or during the appraisal appointment. This law was passed to keep LO's and other real estate entitities from harrassing the Appraiser into giving properties higher values than they supposed to be. Stated as one of the reasons the real estate market crashed (whatever). The problem with HVCC is that the appraiser gets paid through a management company at half of what he/she is supposed to get so the appraiser doesn't spend as much time on the property looking for better value because he/she has to get back into the hopper. The Real Estate Association among others are trying to kill this law as it's killing the value of properties around the country.

The next thing is the condo market. Investment properties require at least 20% down (unless going through HomePath). Depending on your score and the condo questionnaire, the lender may require an extra 5% down from the buyer. You stated that you were putting 25% down and paying 4 points. This may be a sumation of 1.75 points for investment property. The other points may have been because it's a condo and/or because the loan size is under a certain amount (every lender has different point systems).

I would recommend you look into the HomePath program. There are a lot of foreclosures at good prices and currently fannie mae is paying 3.5% in closing costs through December 31, 2010. The minimum down is 10% and the minimum score is 680. No appraisal is required and there is no mortgage insurance. I've added the website below.
Web Reference: http://www.homepath.com
0 votes Thank Flag Link Fri Oct 8, 2010
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