First home buying experience. Questions about getting a loan. (approved, credit check, fees)

[toddlingtown]

I'm looking to buy a townhouse in Chicago for around $300k. I have had bank accounts with Wells Fargo for a few years so I think I will try to get a conventional loan from them, no?. Do I need to have enough cash in the account to show them that I have enough for the down payment (20%)? What paperworks do I need to show them to get the loan approved? I have excellent credit, a stable job and just paid off the car.

Another side question. I'm buying this house with my brother. We want our names to be both on the loan so that we can both improve our credit. However, we want our dad to hold the title of the house. Is that possible?

thanks

[chet everett]

There is absolutely NO relationship between having normal deposit accounts with a bank and going to them for a mortgage. NONE. It is a complete waste of time to even bother with the "retail bank employees" in most branches because all they will do is input your info just like their call center employees would, the difference being that the since the call center is CHEAPER TO RUN that might actually result in a lower rate / fees -- crazy as it sounds it will end up costing you MORE if you start "in person"...

Honestly I would strongly recommend talk to a mortgage broker or two and then deciding if for your situation it makes sense to put down 20% or less. Typically the best rates do go to borrowers with excellent credit and at least a 20% downpayment, but since rates are now so low that may be less of a factor than ever.

As far as "paper work" the process generally starts with demonstration of your ability to pay -- if you have a regular job that pays the same every week a paystub to prove the salary and deductions is all you need to get started. The mortgage broker will need you social security number to run a credit check and then you might need contact numbers to verify how long you've had your job. All in all pretty simple. If you work for yourself / your income varies you will probably need several years worth of tax returns. You do not have to provide physical copies just a permission for the IRS to release copies to the lender.

Your other questions about who you ace have on the title are a whole other ball of wax. Assuming you do not need them to help pay for the place I would recommend that you keep this simple and do not use them as "co-buyers". If you do have co-buyers all their positive income AS WELL AS THEIR NEGATIVE CREDIT HISTORY is needed. Even if they have good credit the simple fact that you are not husband and wife (the most common kind of co-buyers) means that things will get slowed down and with all the messed up lender regulation potentially screwed up! If you need your brother's income to qualify for the loan he has to get approved at the same time you do. Basically best for both of you to meet the mortgage broker together. If you guys just want to "take care" of dad don't bother with three guys as owners. Create a trust after the sale to address ownership or other issues or consult with attorneys about having other added to the title. Lender may not want this and frankly it does not help you either...

You will eventually need to have "proof of funds" before the loan will be approved to close, but there is no reason to put $60k into a account earning minimal interest any sooner than you need to.

Finally I will add that town homes generally do not appreciate the same way single family homes do. Lately the abundance of town home and condo HOAs that are in financial distress are hindering the ability to get loans. If you are not sure that a town home will be able to be financed I recommend you eliminate from your shopping list...