You can use what is called a seller's concession, or in some areas it is called a seller's assist. There is a catch however, the house has to appraise for the higher value. To make it simple to explain how it works, I will use a $100,000 purchase price. Let's say this is what the seller agreed to sell the house for. What you ask them to do is actually sell it for $103,000 and contribute the $3,000 towards your closing costs. Now, you will only be paying 3.5% of the $103,000, or $3,605, instead of $3500 plus your $3,000 of closing costs, or $6500.
A good loan officer can help you work through how much your closing costs should be. Certain things they tell you need to be exact, others can vary up to 10%, and others, such as tax escrows, can change. If you choose a loan officer who is licensed in your state, it is more likely that they will be familiar with how taxes are paid, and will come up with the correct amount for that. There are also certain things that are not included in their estimate, such as the cost of an inspection or your own attorney, which I believe you use in certain areas of MA.
If the house does not appraise high enough, you can't get the seller's concession. Also, if you put in a higher amount for a seller's concession than the closing costs are, the seller gets the extra money, not you.... more
A 680 score is pretty decent for a mortgage - not perfect but it'll qualify for nearly all loan programs. As little as 0% down if it's your primary residence and using USDA Rural or VA financing (I noticed you mentioned NFCU which makes me think you may be or have been in the military), 3% down with conventional financing, 3.5% down FHA financing, 2nd home or an investment property with a 10% down payment. You will get better interest rates with a 740 score however (or if you take a 15-year fixed or shorter term then credit score doesn't matter).
With regards to your credit history, usually lenders want to see that you:
A) Have a credit score (at least 2 credit bureaus are reporting a credit score)
B) Have an open trade line with recent activity (credit card, car loan, etc.)
C) Have at least 12 months of credit history (past closed accounts count towards that as well)
If you were planning on using your credit in the next 3-6 months I wouldn't go out and open up a new trade line quite yet, as opening a new trade line can actually hurt your scores for the first few months after it's opened. As far as maintaining a healthy credit history, I feel it's good to have at least 3 credit cards and (if needed) an installment loan like a car loan or student loan, and a mortgage if you want to have one. Diversity is important, as well as how long each account has been opened (so don't close any unless you have too many - 8-10 would be approaching too many), keeping a low balance on revolving accounts/credit cards, but most importantly you need to have on time payments reporting each month and so that can only be accomplished by having open trade lines. Credit cards are perfect for that since you don't even have to use or have a balance on them every month in order for an on time payment to report - they just need to be used responsibly (and somewhat often or they may close the credit card on you).
Depending on what you are aiming to do, your credit as it is now may be OK, so figure out what your end goal is (is it to qualify for a mortgage?) and let that be your guide on what you should or shouldn't do to your credit. If you have resigned to just purchasing a home 12 months from now then opening up a couple credit cards right now shouldn't have a negative impact since your score should fully recover from the impact of opening new accounts, just keep the balances low & payments made on time.
If you need help figuring things out I'd be happy to, I'm actually working with a civilian contractor out in Afghanistan who is buying an investment property in South Carolina. Communicate via email & Skype too if they had it.... more
This is a good question for a lender to answer after he/she has looked over your situation i.e. income, debt, length of time at job, etc. If you qualify, you may be able to put 3.5% down on an FHA mortgage, or have other options.... more
It depends, its nice to take out a mortgage because it gives you the option to escrow. If you taxes and insurance are included in your payment then you don't have to come up with the money to pay it at the end of every year. I would suggest looking into the mortgage, most of the time your interest rate will be better as well.... more
"FHA Requirement for Establishing Owner Occupancy
At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied.
FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower's principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year."
There can be additional down payment requirements (beyond 3.5% down) for purchasing a 3-4 unit property with FHA financing, the home has to be "self-sufficient" meaning that the 85% of the rents (per an appraisal rent survey) for all units(even the one you are occupying) must be at least the proposed housing payment - so if it's not, then more down payment is needed to make sure the housing payment isn't higher than than that rent calculation. You also need 3 months PITI in reserves as well.
Details on that at: http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?address=4155-1.2.B.4
"The maximum mortgage amount for three and four unit properties is limited so that the ratio of the monthly mortgage payment divided by the monthly net rental income does not exceed 100%, regardless of the occupancy status."
Now FHA is not to be used as a means to acquire investment properties, but technically as long as you meet all of the requirements I don't see anything wrong in terms of being able to qualify for the mortgage with what you are proposing to do. Greater due diligence would be performed, including confirming you could easily sever ties with where you are living (such as a copy of the rental agreement showing the looming expiration date, etc.), and if you own a home, then comparison of your current dwelling vs. the new unit you'd occupy, as well as confirmation there are no renters in the unit you'd occupy and if there were a formal signed agreement or legal notice regarding the rental termination as well. I could also see a higher probability of a post-closing occupancy check being performed.
Feel free to let me know if you have further questions, I'd be willing to help you with the financing as well, but as you can see I'd make darn certain you'd be occupying this home.... more
give them a copy of it....you want a tri-merged credit analysis, or a copy of all three credit agencies....but if they are all pulling within a 30 day time frame for the same purpose i have been told it does not affect the credit score as it used to.
Putting 20% down will save you from paying PMI. Ask your lender about FHA 203 loans. If they don't do them, call around and find a bank that does. They let you roll the fenovations into the mortgage.... more
Jackie it is unlikely, the reason being the home probabily doesnt qualify for a fha loan a sit may need too much work, ask teh listing agnet what it needs to quailify? Your best bet is to meet with a local and trusted mortgage broker, they can prequailify you at no cost, they will look at your credit plus your financials and let you know if there are any mortgages that may be similar to fha that you may quailify for.
The thing that pops out at me first is that you said you got an FHA loan. If the home was an FHA insured home then they will ONLY pay 1% towards buyers closing costs. I dont know your sales price but see if that fits.Other than that, there are many things that could have caused this. Tooo many to go over here. Short sales are difficult and congrats to actually getting to closing though.( I am curious if the math works to the 1%)
Many banks got into trouble with the federal government for robo-signing properties for foreclosure. This means that they did not thoroughly research the properties before foreclosing on them and just signed off on the documentation.
There were numerous properties in question on this issue. Now the banks have them and are suppose to be trickling them onto the market so that they all don't go on the market all at once which would lower home values even further.
Hope this clarifies.
Prudential Connecticut Realty... more
The only way you can do this is if the home qualifies for a rehab loan. The difference in the loan amound and the purchase price will go into an escrow account that will allow you to make repairs on the property and pay out of this account. The money cannot go to anything else, and any unused portion of the escrow account would go back to the lender to pay down the loan.
You cannot use this amount to pay closing costs or as your downpayment.
It's more than real estate. It's RAYL-Estate!
Keller Williams Elite
The lender will definitely put the value of the home at the appraised value or purchase price, WHICHEVER IS LESS. With 40% down, you should be fine, unless your appraised value is very low.
All the best,
Roswell Moore, CMPS
Certified Mortgage Planner
We are a Direct Lender, Mortgage Bank where we originate, process, underwrite and fund, in-house, FHA (w/a 580 score), 203k, VA, USDA, Jumbo, Conventional, loans to Canadians, Australians & other Foreign Nationals, on time. NMLS ID 263779 | AZ BK 0903725... more
Unless you are going to use your own money to pay for all of these improvements, you are going to need to apply for a construction or rehab loan of some sort. Most common today is the FHA 203k (details can be found at www.hud.gov/offices/hsg/sfh/203k/203kmenu.cfm) but there is also a Fannie Mae conforming loan program that finances rehab costs as well.
Essentially what happens is you get your contractors (or hire 1 general contractor) who will bid out the project, you put together a line item cost, a description of the materials, and the documentation on the contractor(s) together and it's sent in to the lender along with your mortgage application. The lender will hire their own appraiser, and provide them all of the rehab info you provided, and the appraiser will appraise the home "subject to" those improvements being made and compare it to other homes like the to-be-completed condition of the home to determine the market value. That market value will determine what the maximum loan amount you can qualify for. If you aren't already, you'll want to work with a real estate agent who has experience with purchasing properties for rehab as determining what the appraised value will be is key to not having to do a ton of revisions to make the financing work out.... more
"Credit" is negotiable. You can always ask and it doesn't matter what is going on, but your Realtor may be telling you that you got such a deal to begin with, it is not worth asking. If it is an individual seller - you can insist that your Realtor ask. They will either say yes or no then you have to decide if you want the house.
If the house is as is - then you can still ask - but they will likely not do anything. You need to decide how much it is worth to you - warts and all - and how good a deal you have now.... more