Mark Pflanzer

The index we watch to help determine what the interest rates are going to do was down today, so it stands to reason that the rates will improve tomorrow. Even prior to the improvement, you could still get an FHA rate at or below 6.500%. Shop that rate. You can beat Bank of America. I would also look at co-signing for your daughter. FHA will allow for a "non-occupying " coborrower and your income would be considered as well and could help her qualify. This could potentially be a better all around loan. The minimum down payment (at the moment....it is slated to change) is 3%, the interest rate will be lower than that of an investment property loan and the monthly mortgage insurance will be quite a bit lower. The challange will be getting the Asset Manager that is handling the foreclosure for the bank/servicer/MI company to accept and FHA offer. Traditionally they do not like FHA offers as the appraisal guideleins are a litte tighter and REO's are almost always sold "as is".....no repairs. The property will have to be in good, livable condition to go FHA. If you think the property will pass, definitely give it a shot. Due to the saturated market, a lot of asset managers are starting to accept FHA offers more often than in past years. A good FHA experienced loan officer will be able to give you some numebrs to compare and expalin the guidelines in detail.

As for borrowering based on the appraised value vs. the purchase price, if you are looking for a standard 30 year fixed FHA/Conventional mortgage, the loan will be base off the purchase price. You cannot borrow over and above and /or pull equity at closing. You could look into obtaining a construction/rehab loan, but that will most likely involve 2 closings and will be more expensive.Those loans are more geared toward properties that need a lot of work before they can pass inspection/appraisal. They are usually short term...6 months....and held in house by the bank. Once the repairs are finished, you would roll the loan into a long term fixed rate loan. That might be worth while if the end result would be a large equity position but can also be a lot of additional work and expense. Odds are you might be able to find something that has equity, doesnt require repirs and would be move in ready for your daughter. We have closed several loans this year where the borrowers netted a fair amount of equity, got their closing costs paid (sometimes down payment assistance as well) and did not have to do any repairs. i would see what is available for that scenario before looking at anything that needs a bunch of work or maybe find something that just needs some minor cosmetic work/TLC. - Thu Jul 31 2008, 23:35

Credit unions can be great for car and personal loans but many of them function the same way the mortgage brolers do when it comes to long term mortgages. They will originate the loan but it will immediately be sold to a servicing company/larger company like Wells Fargo. So, they are going to make their profit in the same fasion as the broker, through fees and what is typically refered to as a yield spread premium. This is a fee that is paid based on the rate that is offered. This is all very typical. What you want to look is the break out of the fees as it sounds like they are between 8-10k, which seems a bit high. Ask them to provide you with a good faith estimate of settlement costs for review. If you are not familiar with the form, get the loan officer to go over everything in GREAT detail. If you see a lot of "junk" fees, such as processing, origination, underwrtiing, application, credit, administration, tax service, etc., question them. I would bet you are being chaged at least 1% in origination. Most of those types of fees are negotiable, especially the origination. If they seem high, take that GFE to a few other lenders and see if they can offer you a better deal. If those fees dont appear unreasonalbe or end up being about the same with several lenders, then part of the cost may be due to prepaid items, which are things like homeowners insurance, taxes, etc. Those are going to be the same regardless of the lender and are not flexible. Yhe credit union may be collecting a lot of additional funds to set aside in your escrow account. I would also ask the title agent or attorney that will be handling the closing about the title insurance. If you have something called an owners policy that would have been purchased when you bought the house, you could be eligible for a discount on your new title insurance. This could save you a few hundred dollars. You can also compare title company/closing attorneys rates. It may be that you could go back to the same people that handled you original closing and see if they would give you a "return customer" discount.

I dont konw what state you are in but overall, based on my experience in the four states we work in, 10k in fees seems high. Get that good faith estimate and use it to compare with other lenders. Based on the current market, 6.375 is a fair/good rate.......shop the costs. Hope this helps. - Wed Jul 30 2008, 20:23

Contact my partner Stephen Henson. He is in SC and is an FHA expert. He has closed several FHA loans with low scores........well below 580. We also have an underwriter that will gladly fund manufactured homes as long as they are on FHA/HUD approved permanent foundations. If the foundation is not HUD approved, it will be extremely diffucult to get any type of reasonalbe financing. You can reach Stephen at shenson@bancservices.com Tell him Mark told you to call. - Wed Jul 30 2008, 22:53

That should be possible. Conact Shane Powell with Crye-Leike in Franklin. He is a super guy and knows that area well. He and his wife live in Spring HIll. Both are fantastic people. Ask them to send you some searches. You can email him at shanepowell@shanepowell.com or call his cell. 615-604-8207. - Wed Jul 30 2008, 21:58

If you are looking for an agent to help, i would strongly recommend Shane Powell. He lives and works in Spring Hill. He and his wife are fantastic people. If nothing else, they may be able to offer you some advice. I know they do run across people on ocassion that are looking for lease purchases. Tell them Mark in Murfreesboro sent you. I am sure they would be happy to help and won't pressure you for a listing if that is not what you are looking for. You can email Shane at shanepowell@shanepowell.com. Good luck! - Wed Jul 30 2008, 21:51

You will have to wait until you have been discharged for 2 years. Afterward, you would be back within FHA's current guidelines. FHA will go off of the discharge date as opposed to the filing date. This is assuming that there was no foreclosure involved in the Ch 7. I would get with a lender and get a game plan in order. Let someone review your credit and see how it looks now and if any updates need to be done. You may need to start rebuilding some conventional credit or preparing to provide "alternate" credit references. Your lender can explain that in detail. It will also help if you can provide a solid rental history and have some money set aside in savings. In fact, the down payment assistance programs that so many buyers have been using with their FHA loans is slated to go away in a couple of months. If that doesnt change, you will have to have 3-3.5% as a down payment.

Get with a lender and get a game plan going. That 8-10 months will go buy fast, especially if you have some things to get in order. Find someone that you are comfortable, can answer all your questions and doesnt mind helping you along the way. CH 7 is definitely not the end of the world. You should be good to go before long. Good luck. - Wed Jul 30 2008, 21:35