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Don't think just because you have 20% down it's going to be a cake-walk, it's equal opportunity pain for everyone. We are seeing investors auditing every loan now (post-closing in our case, some lenders are seeing audits pre-closing). So, anyway, the investors audit, they kick back a closed loan, not going to buy it because we didn't document the source of a deposit......(source: couple had gotten married, had announcement, license, copies of all the wedding gift checks, but there was some cash co-mingled.....now, reason would say, some people gave cash as a wedding gift, and as the funds were deposited at the same time, the extra funds were part of the couple's wedding gifts......right?.........wrong!) The result has been the underwriters continue to turn over every rock in a file, making the should-be-simple transaction a nightmare. Granted, that was an FHA loan, but it feels like every loan is being underwritten as if it were the 3.5% down (not quite, but sure feels like it some days).
There's no wonder processors are overwhelmed - they don't have a chance. You can't cut corners in this market, and now than ever, you need to take a defensive processing stance. But back to the OP's thoughts about the differences, I personally don't think "an easy" loan exists any longer........only better prepared borrowers.
Where my 20-50% down comes from should not be relavent only my income and ability to pay on future payments. I should not matter if the deposits were from mob drug money, 20% is 20%. I guess people will just have to save for 100% down and screw the banks. If banks dont want to lend money then what are they good for. I understand due diligance but it sounds like they are looking for an excuse to not lend, in that case then what is there use?
And to the OP, it's not hard to get a home loan on an FHA loan.
I agree...that was basically my point. But a lot of people out there seem to think it is. I'm relatively young so I don't really know the full extent of how easy it was to get a mortgage during the bubble, but if it really is a lot harder now (and it doesn't seem to be that hard now), then wow.
Where my 20-50% down comes from should not be relavent only my income and ability to pay on future payments. I should not matter if the deposits were from mob drug money, 20% is 20%. I guess people will just have to save for 100% down and screw the banks. If banks dont want to lend money then what are they good for. I understand due diligance but it sounds like they are looking for an excuse to not lend, in that case then what is there use?
Nothing new that any funds needed to close must be verified and come from an acceptable source. Cash is never an acceptable source (i.e. borrower says they have $10k in their safe) The lenders/investors want to make sure the funds weren't borrowed as they would not be accounted for in debt to income ratios. fyi-it is allowed for down payment and closing funds to be borrowed but it must be a secured loan and it must be accounted for in the DTI. fyi #2-it is typically not the bank's money that is being lent for home purchases, but rather investor's money that purchase Fannie & Freddie bonds. Fannie and Freddie set the guidelines. What incentive would a bank have not to lend?
Where my 20-50% down comes from should not be relavent only my income and ability to pay on future payments. I should not matter if the deposits were from mob drug money, 20% is 20%. I guess people will just have to save for 100% down and screw the banks. If banks dont want to lend money then what are they good for. I understand due diligance but it sounds like they are looking for an excuse to not lend, in that case then what is there use?
This is incorrect on so many levels in the real world, unless it's only opinion.
First, post foreclosure audits, even pre mortgage crisis, showed that the highest predictor was the down payment was not the buyer's own money. The phrase "skin in the game" when dealing with mortgages was born out of these mortgage audits.
But, even before 9/11, banks were required to file SARs reports, Suspicious Activity Reports filed with the Financial Crimes Enforcement Network, a division of the US Treasury. This is worth a google if you aren't familiar with the SARs.
It doesn't matter if it's bank, broker, credit union, all mortgages live by the same guidelines regarding the borrowers' assets. Their gold, their rules.
Don't think just because you have 20% down it's going to be a cake-walk, it's equal opportunity pain for everyone.
I hear that... we have no debt aside from housing and put 40% down on a place last year and it seemed like even with that it was a huge question whether we'd be able to close or not because of everything the bank needed to go back and get more information on. Another one I put 20% down on in December was also a huge pain, and I can't imagine it getting any easier in the future.
For the longest time I was pretty much stuck in renters mode because the whole thought of buying scared me. One day I decided to look at homes on a website and put in my information, a realtor called and that is where my search began. She also got me in touch with a lender. Long story short here I am less than a week away from closing, fully approved by underwriters (after a month or two of hell) I am only putting down 3.5% and my intrest rate is 3.75% with 30 year fixed FHA so it can be done! I have other debts (car payment and credit cards totalling $30k). My main reason for buying is to save money from renting (I will be saving $300 a month).. So I guess I am here to say it can definatly be done without 20% down and for people like me: 25 years old, not a lot of money saved up, other debts ect. I guess it could be more difficult for people who have less than stelar credit.. and some people probably make those statements without really knowing.
How much is your property taxes? I have a feeling that $300 per month you are "saving" will be going to your property taxes/homeowners insurance.
I'll chime in as well since I am going through exploring mortgage options currently. I am a renter in NYC. I have been planning on leaving my current place at the end of my lease this summer. As anyone in this area knows rents have gone through the roof in the past few years and continue to climb. I had never really considered buying as a serious option but with the ever increasing rents I decided to run some rent vs. buy calculations and found that buying has very much come into line with rents even when using very conservative numbers.
I figured I would go ahead and just check with lenders to see what is out there and have been shocked by how willing they are to give out mortgages these days. I have 5% down, good income, credit above 720, and low debt. Lenders have stated that I shouldn't have a problem with either a 5% down 30 year fixed or an FHA. They are willing to leverage me up to 45% DTI (I would never take advantage of that amount but am using it to illustrate that they are willing to lend).
Before I even started pursuing this I had read so much about people with 20% down not being able to get financed that I didn't even consider buying a realistic option. I guess I'm just here to point out that is not the case. I assume other metrics like income, debt, and credit score play heavily into this equation.
Lastly, I tend to disagree in general on the whole argument that putting 20% down is always the way to go. That is a SIGNIFICANT amount of money in NYC for first time home buyers. Modest 1 bedroom apartments here easily climb into the 400 - 500k and higher range. If you're not raking in 100k bonuses in banking it can take forever to save up that amount. And then you'd be talking about a massive opportunity cost that you need to think about.
I believe if you're responsible with taking on a monthly payment that you can afford while still saving that you should gladly take the leverage that the bank is willing to give you and keep your rainy day fund in tact. Obviously opinions vary on this matter.
I hear that... we have no debt aside from housing and put 40% down on a place last year and it seemed like even with that it was a huge question whether we'd be able to close or not because of everything the bank needed to go back and get more information on. Another one I put 20% down on in December was also a huge pain, and I can't imagine it getting any easier in the future.
I think that is a good thing. I think that is a different issue than it being hard to get a mortgage with 20% down.
First time home buyer, closed in August of 2011. Had 5% down, 30 year fixed. High credit scores, very little debt, no monthly payments (no car loan, no student loans), decent income for the area, and had no absolutely trouble getting approved for much more than we needed. Have to pay PMI of course but even with that we're well able to pay the monthly PITI and I'm hoping/expecting my income will rise quite a bit in the next 5 years or so. We're maybe an exception to the rule, having great credit and not much debt, but it's an example of not having trouble getting a loan without 20% down or using FHA. Housing costs are low here so it wouldn't be impossible to save 20% but would take us ~5 to 8 years to save that much instead of building equity in the house for that amount of time and hopefully have 20% equity by then so we can kill the PMI.
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