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Old 06-06-2011, 01:46 PM
 
42 posts, read 155,757 times
Reputation: 43

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We have been speaking with a mortgage company and are in the process of getting approved i guess it would be. All of our income data, debt data, the appraisal based on blue prints has been submitted to their underwriter and we should know Thursday.

We kind of went about the mortgage backwards. My now wife and I had picked out a house design we really liked, decided that was what we were going to work for and had planned on starting building in the next couple years. Well at the end of March we found out we are expecting, got married April 16th, and now we are in the process of building that home. Our mortgage officer/broker hasn't really given us any indication of what chance we have for qualifying.

My mother had given me a lot from our farm to build on and it's 2 acres. I own that outright. It's already had a site evaluation, perk test etc. So i have that as equity. My wife makes 39,000 a year been at that job 5 years, i will make 43,000 this year with the new job, last year i only made 35,000 (different job) and the year before that only 31,000 (different job was at 5 years prior and i was laid off for about 4 months). Before that though i was 35-40k the previous years but i know that income won't matter. They were the same line of work.

My credit scores range from 715-735 and hers from 689-700. We have less than $400 on credit cards combined of around $10,000 total credit and even that will be paid off by this month. Our monthly car payments combined are about $850. We have no other debt.

We are applying for $212,000 which would cover the cost of the house and all loan fees. The house costs 208,000. We had the land and house appraised at 273,000. I am thinking we should be ok but the lack of positive attitude from the mortgage company has me second guessing. If i can get approved by the end of this month there is no problem with getting the house done a month before our baby is born which is what i am shooting for.

They have given us a good faith estimate with an interest rate of 5.25% if that matters. Our property taxes would be somewhere around $1,000 a year, homeowners insurance will be $620 a year.

What do you all think?
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Old 06-06-2011, 02:03 PM
 
42 posts, read 155,757 times
Reputation: 43
Also my builder carries the cost of the house, no construction loan required and will start immediately upon my commitment letter from the lender. Estimates it should take 3 months.
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Old 06-07-2011, 05:06 AM
 
Location: MID ATLANTIC
8,066 posts, read 19,783,416 times
Reputation: 9120
Here's some questions for you........is this a "one step close," aka "one time close?" I am going to assume this is the type of loan you are getting.....and if so......

The approval is based upon the "end loan." The lender has to guess what interest rate will be the max at the time the loan can be locked, or lock you in with a very expensive extended lock. So you can see, how long the builder takes to complete the home is key.

Just some comments and random observations.

The interest rate being used is about 1% above market. This is somewhat a standard precaution, the fear being, the home is built, then when it's done, you can't qualify. Doing my standard eyeball telephone-on-the-spot qualification, you're more than fine on the qualifying ratios, expecially with your end equity.

I am guessing here.......but the one sector of our industry that got slammed harder than anywhere else is contruction money, C-Perm especially, its crawling out from oblivion. I suspect the waffling vibes you are picking up are someone that isn't real comfortable with the construction process, or, the concern is not about you, but the builder. Almost all c-perm lenders require the builder to be vetted......their credit and creditials must be up to snuff, just as much as the borrower's. And within our industry, builders and contractors are the one group that got hit the hardest.......maybe more than appraisers and lenders.

Normally, I would tell you to shop this lender against another, but you may not have another option w/ c-perm. What makes it even harder, you don't know the questions to ask to ferret out a problem. There are a few options if your loan hits the skids........first, if it's you (very doubtful), you can ask the lender to evaluate you for an ARM or a buydown. If the problem is the builder, you can break the process into two steps. Not the ideal, but if you go with a construction loan, followed by a refi, there are lenders that won't put the builder under the microscope. That means you would take out the construction loan in your name (you still could have the builder pay interest) and at the end of construction, you would refinance your loan. Downside to this, you would need a minimum of 6 months on title (if you are not already on it) and the duplicate closing costs.

C-perm is not the ideal for a first time homebuyer. It's important you have someone in this process to guide you.
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Old 06-07-2011, 06:16 AM
 
28,461 posts, read 74,527,435 times
Reputation: 18505
While I agree that the raw ratios are OK it does not sound like the OP has much / any cash. Scores are a little low.That might not be too big a deal if the land was not gift, but since it is most lenders will be very cautious.

If the OP has any savings, even retirement accounts , that ought to be the kind of reassurance that the lender is looking for -- most residential construction takes much longer than anticipated and costs rise.

You really need to be extremely cautious with any new construction, especially with a builder that seems a little too anxious to start working. If things go wrong the liens the builder will have can means you lose...
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Old 06-07-2011, 08:06 AM
 
42 posts, read 155,757 times
Reputation: 43
the builder was actually reccomended by the mortgage broker. the broker is a very good friend of my moms who is an attorney. ive seen a few homes he built and is finishing one 2 miles from our lot now. he seems to be very quick at building and im very pleased with the quality.

i am unsure if it is a one step close.

we do have some cash not much, a couple thousand, but are keeping it in reserves for when the baby is born. i agree its not ideal and our credit scores are not that high but we are 24 and 25. we had planned on waiting but unexpected children have a way of changings things.
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Old 06-08-2011, 04:39 AM
 
Location: MID ATLANTIC
8,066 posts, read 19,783,416 times
Reputation: 9120
If you can support the payment, you meet the criteria for a Fannie Mae loan with >20% equity. Frankly, I am more concerned about who is looking out for your interests and the lack of details about how the construction loan is working.
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Old 06-08-2011, 05:21 AM
 
42 posts, read 155,757 times
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The payment is no issue for us. I think the problems is i am speaking with so many people each thinks the other is telling me what is going on. I have a mortgage broker, who sent me to a a mortgage officer i believe, who then sent me to two other people one who prepares the paperwork for the underwriter and the other who sent me all of the paperwork initially. We are using (not sure if im allowed to say) home savings of america i believe. the last two people in the line of people are from there and the loan officer is affiliated with them i believe. Everyone is very nice i think they are just waiting until everything gets back from the underwriter to tell me anything because it's a 'unique' situation or so i have heard. I have had my mother check over all of the paperwork before i signed anything as she is a real estate attorney and i really dont know anything about it.
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Old 06-08-2011, 05:56 AM
 
28,461 posts, read 74,527,435 times
Reputation: 18505
What you are describing is, frankly, VERY odd. There is no good reason for you to talk multiple people that all work for the same organization. Most efficient mortgage lenders will have ONE person coordinate the information gathering. Once the information is reviewed by an underwriter that same person should communicate to you that everything is either OK or request additional documentation.

My hunch is that if your mom has done LOTS of work with this lender maybe this people are just trying to "meet the family"...

I really hope that you or mom did some "shopping around" to know that the organization you are using will be responsive and competitive with fees / rates.

Finally, even if mom is an attorney and she does LOTS of closings I would hope that she has LOTS of experience with builders and new construction there are many potential pitfalls when dealing with a situation where you own the land and new construction is done...
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Old 06-08-2011, 03:02 PM
 
42 posts, read 155,757 times
Reputation: 43
That seems like it would make the most sense. The appraiser also made a 700sqft error appraising our house for the first time based on only 1500sq ft and it's 2200 on the first floor, 2nd floor is semi-finished but doesn't count since it's not heated area.

My mom hasn't done any work with this lender (HSOA) that i know of. She sent me to her friend who sent me to this guy. I am really unsure of any of the process and it seems all a little confusing. I've never had to go through this before i dont know if i have good or bad service haha. As long as i get the mortgage at around 5% i really dont care, i think thats resonable. I believe we are looking at $4500 or so in closing costs which i think is high since there will be no transfer taxes or anything.

I dont believe we did any shopping around, just went with her friends advice. I believe there will be a lien on the land until the house is complete. I really dont think the construction part is going to be an issue, the builder is very reputable. The mortgage is what seems to be the big hurdle here. The house and land are worth much more than we are borrowing, we make enough money, and our credit scores arent horrible so i dont see why we shouldnt be able to get a loan. If not through this company than through someone else.
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Old 06-10-2011, 01:25 PM
 
42 posts, read 155,757 times
Reputation: 43
Well now the underwriter or someone is saying they have to apply for an exception since i havent had the land in my name for 6 months. I would have thought they would have known this right at the start since i told them and sent them a copy of the deed.
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