Getting a loan - need advice - tips and tricks

Asked by Marc Perkel, 95020 Wed Apr 8, 2009

Just about to close on a house and will need to scrape up a loan in the next 30 days. The way the deal looks is I'll be paying $207,000 with seller paying up to $12,400 in closing costs. House needs some work like termite gassing etc.

I'm looking for a conventional loan. I have 15% to put down. The home is a very good deal and should appraise for far more than the loan amount. My credit score is 741. I have no debt. Car paid for. Renting now and my payments (30 year) will be less that my current rent.

I am self employed and have been self employed for 30 years. (spam filtering business). I have tax returns, bank statements, recurring income data. (My income is subscription based).

So - where is the best place for me to get a loan and what should I know. To me "best" doesn't necessarily mean the very cheapest. I like something that is hassle free with bankers that are competent. I'm going to be moving to Gilroy California so local is a little bit of a plus.

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11
Gregorio Den…, , San Diego, CA
Fri Jul 6, 2012
Quote:
" I see that this is 2009 -- in 2012 you'd not be very likely to get a loan self-employed"

Carla, what are you talking about? It's this type of nonsense misinformation that cripples the housing market and confuses borrowers. Getting a mortgage with self employment income is very easy; all you have to do is claim it and pay taxes on it and it's just like any other income.

Please stop spreading misinformation!
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Carla Muss-J…, , Portland, OR
Fri Jul 6, 2012
You haven't gotten a loan?! Where was your agent? I see that this is 2009 -- in 2012 you'd not be very likely to get a loan self-employed
0 votes
Ryan Branden…, Mortgage Broker Or Lender, Boca Raton, FL
Wed Apr 8, 2009
Hi Marc,

Considering your credit score is 741 and your income is sufficient I would go for conventional financing vs. FHA. They took the MI programs away for a couple months but they are back up to 90%. Going conventional will help you avoid the upfront Mortgage Insurance required by FHA.

When it come to rate, everyone will be in the same ballpark. My approach is to look at your long term goals and determine if there is "Value" in paying points or not. For instance if your going to pay a point or 1% to save a .25% on your rate, the breakeven point is 4 years 4x.25%=1%. If you plan on staying in the property 4 plus years then paying a point makes sense.

You said it "best" cheapest is not always the best. Fortunately im both...lol.

Call me if I can be of assistance.

Ryan Brandenburger
954-394-9005
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Glen Mitchell, Agent, Half Moon Bay, CA
Wed Apr 8, 2009
The bank gave you more money back then you asked for?? 15 year loans rates are maybe a 1/4 better than I showed below. So that will save you a little $$, but you might want to consider getting the 30 and paying it down each month as if it were a 15 year loan. Then if you get to a tight month or want to spend money on something else that month you can pay the 30 year rate. You may decide to buy an investment property down the road and this play could also help you reduce monthly debt amounts to qualify easier. Just a thought, I have nothing against the 15 year loan you just need to think through what works best for you long term and paying a 1/4 percent more may or may not be a good deal for you.

Glen
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Marc Perkel, Home Buyer, 95020
Wed Apr 8, 2009
I was actually prequalified by 2 different lenders. But I'm not sure if the lender who prequalified me I'm just trying to see if whatever deal I'm offered is going to be at least close enough to the best deal. Also wanting to understand my options.

I have 15% down and really good credit. I have no debt. So I'm expecting a good deal. I might go 15 year fixed. No prepay penalties, no trick in the loans. I want to avoid the fraud based loans that we common a few months ago.

This property is a foreclosure. It is bank owned.
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Glen Mitchell, Agent, Half Moon Bay, CA
Wed Apr 8, 2009
Hey Marc, congrats! Have you not already been working with a lender to get pre-qualified? Is there a reason you don't want to go with that person? Most home sellers these day prefer to see something from a bank/lender before they accept an offer to reduce the likelihood the deal is going to not work out due to financing issues. doesn't help 100% of the time, but does help. For a $200k purchase the credit back is a little higher than average. Your rate based on info you provided would be about 4.5% with 1 point possibly down to 4.125% with a couple points. Lender/mortgage broker fees right under $1000, bank fees $600-$800. Is the home a short sale? Are you paying for a short sale specialist to help out in the transaction? seller may have raised the amount knowing they aren't actually paying for it, or maybe you just found a nice seller.

Glen
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Matthew Bart…, Agent, Glendora, CA
Wed Apr 8, 2009
Hello Marc,

You are right when you say "the best doesn't necessarily mean the very cheapest." The worst questions you can ask a prospective lender is what is my payment, and what is my interest rate? Instead when looking for a lender ask the following questions:

1. When will I be able to pay this loan off?
2. What will this loan cost me?
3. Do they offer a Fixed Rate Loan?
4. What are the fees that come with a loan?
5. How do the banks bill paying and elimination services work?
6. Does the lender offer a Daily Average Unpaid Balance Loan? You need to make sure your lender applies each payment immediately and does not wait for the second half of the month.

The first two questions above are huge. Most people think because they have a low rate or low payment that they have a great loan. The reality is in most cases these same people are paying hundreds of thousands of dollars more than they needed to over the life of the loan. The answer to that brings me to question number five above. A Daily Average Unpaid Balance Loan is the best loan you can get. When you make a payment the bank will apply your payment immediately and then re-ammoratize the loan. This will get you added interest savings. Many banks offer a Daily Average Unpaid Balance Loan but they will NOT mention it, because they do not make as much money on them. Instead, they offer a 30 day Pre-Computed Loan making the bank tons of money at your expense. Make sure the bank puts their offer in writing and do not be afraid to walk away and find another lender if you do not feel comfortable working with them. If you have any further questions please feel to contact me. Good luck!

Matt
0 votes
Marc Perkel, Home Buyer, 95020
Wed Apr 8, 2009
Yes - I think the seller intends to fix some defects with the property. After the property was inspected the seller offered to pay more of the closing costs than I had offered (which is interesting) so I assume that some repairs are going to be included.
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Theresa Bens…, , Santa Clarita, CA
Wed Apr 8, 2009
Good Morning Marc

Your closing cost do look high unless you are counting impounds for PMI, TAXES AND INSURANCE. If your loan is going to close in May the good faith estimate maybe showning 6 months of property tax impounds to be collected at the close of your escrow since your first won't be until July 1, 2009. It is also important to remember that the seller cannot pay any of your prepaid taxes, insurance and PMI on a conventional loan. Only FHA financing can that be allowed.

How many points are being quoted on your good faith estimate?
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Jim Gallup, , Walnut Creek, CA
Wed Apr 8, 2009
Hi Marc,
I am a mortgage banker - meaning we fund loans from our own money, then sell to the secondary market after close of escrow. This allows me to be very fast in processing your loan. You have a couple options:

1. With a minimum of 10% down, you can do a conventional loan. Rates are great, fees are low.
2. You can save your cash and put 3.5% down with an FHA loan. Rates are still very low, but fees are higher (but most can be financed).

There are a couple of benefits to an FHA loan that you should consider:

1. All FHA loans will allow you to add up to $8000 to the loan amount to finance energy efficient upgrades such as a new heating/air conditioning unit, new windows and doors, etc.
2. With the FHA 203k, you can finance in cosmetic improvements - new carpet, flooring, paint, appliances and more - even solar!
3. FHA loans are assumable. When you go to sell your home, the buyer can apply to take over your existing payments and interest rate. If you believe that rates will rise in the coming years, this can be very important.

Either way, we can certainly get you the financing you need without a lot of hassle. Underwriting turn times for us are 24 hours from submission of a complete loan file (FHA or conventional).

Feel free to call me at (925) 831-6274 or email me Jim@JimGallup.com with any further questions.

Good luck, and congratulations on your new home!
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Memphis Owne…, , Tennessee
Wed Apr 8, 2009
A word of caution, Marc. It does appear that your closing costs are extremely high. For a conventional loan, costs usually run about half of this. It's important because I'm sure the seller-paid closing costs are reflected in the price.
Web Reference:  http://www.Ref-Buy-Apply.com
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