Getting a mortgage for the house we bought (foreclosures, house insurance) - Dallas - Texas (TX) - City-Data Forum

Bird Lover · 04-11-2009, 09:41 AM

I feel like a third class citizen because I am retired. We are in escrow and it is difficult to get a mortage although we could buy the house with cash from our savings and have money left over. My retirement funds have started coming and will be enough to pay the mortgage, insurance, property taxes and our living expenses but since my income is reduced, I feel like a criminal when talking to my lender. We have one debt, a car loan which we can easily pay but the lender wants us to pay it off and now we are told that we can choose our own mortgage company but it is not recommended. We have to choose the lender's company house insurance because other insurance will be too high. Feel locked it and bewildered!

Bird Lover

loves2read · 04-11-2009, 09:46 AM

I guess so
are you looking for sympathy (don't mean that to be a slam) or advice about how to ameliorate the negatives you feel are coming due to being retired and attempting to buy a home...
I don't know why you should not choose your own mortgage company if you can research the info for those available...
it sounds like you are doing this without advice from a realtor--so you are against all the "professionals" you are having to deal with...they can gang up on anyone--not just a retired person..that is why having a buyer's agent often helps to bolster your confidence
do you have investment advisor that might offer perspective/insight/advice...
what about your banker--any relationship there--banks often have mortgage depts...
how long have you considered doing this --what is obviously significant--change at a turning point in your life--are you relocating from another part of the state or just downsizing due to your change in lifestyle?

SouthernBelleInUtah · 04-11-2009, 10:35 AM

There should be a credit union you can join. MIne is for residents of the valley (in UT). CU rates are lower and they are usually more understanding than other types of lenders. Go look for one!

Bird Lover · 04-11-2009, 10:43 AM

I meant to say that the lender says that we can choose our own homeowner's insurance company but we may not get the loan. She says that we have to choose the one with her company because the other companies will charge too much thus upsetting the ratio. I wanted to use a company that I have been working with for years. I asked her the name of the company that she wants for the insurance and she doesn't even know the name. She will contact me after she finds out. Seems to me that at a bare minumum, she should know the name of the company.
I don't know what I want sympathy, advice or what but am upset that I have excellent credit rating, more than enough money to buy the house with cash and Social Security, Pension and an Annuty that I have earned and the lender implies that I am not a good risk.

Big G · 04-11-2009, 11:02 AM

Sounds to me like you need a new lender.

That line about having to use "our" insurance company is pure BS. How could she possibly know what the cost of insurance will be from your company vs. her company? If she can't even name the company, I'm quite sure she doesn't have any information about the rates.

If they are lying to you about this, what else are they lying about?

If I'm understanding this, you have a long-standing relationship with an insurance agent. I'd suggest going in to him/her and discussing this line of poppycock your potential mortgage broker is feeding you. Your insurance agent could probably get you hooked up with a mortgage provider less likely to jack you around.

nsumner · 04-11-2009, 12:15 PM

It doesn't sound right. Is this a builder that is asking you to use their lender and their insurance company? that would be the only thing that makes sense IF they were giving you some special incentives for using their affiliates.

If not, you can use anyone that you want. How does she know what the others are going to charge you? did you give her a quote? If you show her your insurance agent's quote and they beat it then it would be to your benefit.

It would make me question what other terms of the loan and fees you are being quoted. Have someone knowledgeable review that lender's good faith estimate to make sure that they are not overcharging you.

Naima

Grainraiser · 04-11-2009, 04:06 PM

Naima's advice is spot on. Unless the builder is steering you toward a lender for incentives you should be very leery. Like stated how does she know what your insurance is going to cost you in advance. Something smells very very fishy to me. Depending on your ratio's you should be good to go. I would have someone in the business take a look at that good faith estimate to see what is what. Her not knowing the name of the insurance company but trying to send you there is a huge red flag. Do your homework before going any further.

Bird Lover · 04-11-2009, 06:21 PM

Hi folks,
Thank for the good information. Will see the people I trust about the insurance quote. I really appreciate the help you have given us. If we find out that we want no more of this lender (that may be soon), do we loose the loan origination fee? I already know we have lost time with her.

Bird Lover

txgolfer130 · 04-11-2009, 07:03 PM

First of all, as long as your ratio's are fine, and you have enough income to continue the ratio's there should be no problem. I will tell you right now, though that if you don't have a great score(690+), or are very close to the limit of what your ratio's will max out at, you will have problems.

That being said. It is a RESPA violation for your 'lender' to insist that you use THEIR insurance company. That is a FEDERAL LAW. Second, it is a violation of TEXAS Law. Third, before doing so, they MUST disclose their combined business practices to you BEFORE you sign a contract or 1003 (mortgage application).

For further information please visit:
Homes and Communities - U.S. Department of Housing and Urban Development (HUD)

nsumner · 04-11-2009, 10:35 PM

Quote:

Originally Posted by Bird Lover

Hi folks,
Thank for the good information. Will see the people I trust about the insurance quote. I really appreciate the help you have given us. If we find out that we want no more of this lender (that may be soon), do we loose the loan origination fee? I already know we have lost time with her.

Bird Lover

Oh boy, this is getting better...

The loan origination fee is not due to your lender until the time of closing. It comes out of the proceeds included in the closing costs.

I hope that you are talking about an application fee which should be no more than a couple hundred if any. If so, then the answer is yes you will lose that app. fee if you decide to go with another lender.

The only cash you should be out before closing is:

Application fee: 90% of today's lenders are not charging this in my experience.

Once a property has been identified and contract executed:

Earnest money: made payable to title company (you get it back as credit at closing)
Option fee: if it's preowned : made payable to seller (you also get it back if you don't back out after inspection)
Inspection fee: made payable to inspection company (you don't get this back)
Appraisal fee: made payable to lender or directly to appraiser (you don't get this back). On rare occations the lender will collect the appraisal fee at closing too.

On rare occasions on some foreclosures the buyer is responsible for turning on the utilities so the gas/electric/water co. may ask for a small deposit.

Other than these customary expenses, you should not have any money going out. The rest of what you owe such as down payment and closing costs prepaids are due on the day of closing.

Naima