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Old 07-20-2015, 09:11 AM
 
Location: Katy
264 posts, read 298,507 times
Reputation: 86

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Hello CD experts,

I am a little nervous/anxious/curious.
I am self-employed and I recently signed a Purchase Agreement with a (very reputable) builder in a very promising up-and-coming community in Houston, TX.
I wanted to present my situation, and get your inputs on what to expect:
Been self-employed since 2012
My FICO credit score is 800+
Current D/I ratio is under 10%

Builder said I am an excellent candidate because of my credit.
First step was to get pre-approved by builder's lender (mandatory) - which I did - Lender too assured me I wont have any problems getting approved.
I decided to go with the builder's lender because they give $8k in closing costs and they practically assured me that I will get approved and that everything will go as smoothly as possible up until closing... My priority is 'smooth closing process' - I won't fret about interest rates at this point... So I recently provided all the documents they asked for. My taxes are prepared by a CPA, so I don't expect any problems with my paperwork.

My biggest worry/concern is: what if I don't have all the cash necessary at the time of closing?
Lender assured me that they even have 10% down plans - which is very doable for me.
My question is, what if I am a little short - what if I have only like 8% or something for down payment at closing time?

I guess, what I mean to ask is: for a self-employed individual like myself, with 800+ credit score, and low D/I ratio, are there mortgage plans that allow for less than 10% down payment? If yes, how much?

Cash-flow is not a problem. Timing is the problem. I might have 8-9% by the currently scheduled closing time, i.e. Feb 2016... however, I will positively have 10% down-payment by Mar 2016...and 12% by Apr 2016...and so on...

Any feedback/comments/inputs will be highly appreciated.
Best,
DrD
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Old 07-20-2015, 10:33 AM
 
Location: Austin
7,205 posts, read 18,323,770 times
Reputation: 9806
The lender needs to look at all your cash and assets. They won't approve you for a loan if you can't qualify, which means having the necessary amount of cash on hand. That also includes having reserves. The lender is not going to allow you to spend every penny you have on your down payment. They will want you to have so many months worth of payments left in the back.

You need to speak with your mortgage person to get more details and to make sure he understands your situation.
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Old 07-20-2015, 10:36 AM
 
Location: Katy
264 posts, read 298,507 times
Reputation: 86
Quote:
Originally Posted by FalconheadWest View Post
The lender needs to look at all your cash and assets. They won't approve you for a loan if you can't qualify, which means having the necessary amount of cash on hand. That also includes having reserves. The lender is not going to allow you to spend every penny you have on your down payment. They will want you to have so many months worth of payments left in the back.

You need to speak with your mortgage person to get more details and to make sure he understands your situation.
I understand.
Thank you very much FalconheadWest.
I have reached out to my lender, and am awaiting their reply.
Thanks again!
DrD
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Old 07-20-2015, 10:48 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
31,304 posts, read 57,045,755 times
Reputation: 33631
Things have tightened up a lot since we got a mortgage with me being self-employed but at a brand new business just started in 1993, but I did have 20% down. Even the last time we refinanced before the recession the lenders required a two year history with profit/loss and checking account statements,
and the last two tax returns from the IRS to verify income. You have three years, so as long as your documentation supports the income needed to qualify you should be OK. When the time comes to put up the cash, perhaps you have a good customer/client who would be willing to pay you up front for future work at a discount? I once had a customer give me $10,000 in December in order not to lose funds budgeted but not spent. I just invoiced them showing the credit less each order for a few months until it was used up.
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Old 07-20-2015, 11:33 AM
 
Location: Katy
264 posts, read 298,507 times
Reputation: 86
Quote:
Originally Posted by Hemlock140 View Post
Things have tightened up a lot since we got a mortgage with me being self-employed but at a brand new business just started in 1993, but I did have 20% down. Even the last time we refinanced before the recession the lenders required a two year history with profit/loss and checking account statements,
and the last two tax returns from the IRS to verify income. You have three years, so as long as your documentation supports the income needed to qualify you should be OK. When the time comes to put up the cash, perhaps you have a good customer/client who would be willing to pay you up front for future work at a discount? I once had a customer give me $10,000 in December in order not to lose funds budgeted but not spent. I just invoiced them showing the credit less each order for a few months until it was used up.
Thank you for that encouraging reply Hemlock. In my case, it is the builder and builder's lender who have been very encouraging and very positive about my chances of being fully approved. Pre-approval happened in minutes... now waiting to get the full approval done. Fingers crossed!
Regards,
DrD
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Old 07-20-2015, 12:55 PM
PDD
 
Location: The Sand Hills of NC
8,774 posts, read 15,293,297 times
Reputation: 11906
My brother and I both applied for a mortgage around the same time frame.
I was putting down 70%, he was putting down 10%
They gave me a hard time for weeks before they approved me.
He got approved in days.
I was in business for 10 years.
My brother had just started working for me.

That was 30 years ago maybe times have changed?
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Old 07-20-2015, 12:58 PM
 
Location: Katy
264 posts, read 298,507 times
Reputation: 86
Quote:
Originally Posted by PDD View Post
My brother and I both applied for a mortgage around the same time frame.
I was putting down 70%, he was putting down 10%
They gave me a hard time for weeks before they approved me.
He got approved in days.
I was in business for 10 years.
My brother had just started working for me.

That was 30 years ago maybe times have changed?
Wow that is interesting PDD. Thank you for sharing!
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Old 07-22-2015, 03:43 PM
 
Location: Katy
264 posts, read 298,507 times
Reputation: 86
Quote:
Originally Posted by DrD76 View Post
Hello CD experts,

I am a little nervous/anxious/curious.
I am self-employed and I recently signed a Purchase Agreement with a (very reputable) builder in a very promising up-and-coming community in Houston, TX.
I wanted to present my situation, and get your inputs on what to expect:
Been self-employed since 2012
My FICO credit score is 800+
Current D/I ratio is under 10%

Builder said I am an excellent candidate because of my credit.
First step was to get pre-approved by builder's lender (mandatory) - which I did - Lender too assured me I wont have any problems getting approved.
I decided to go with the builder's lender because they give $8k in closing costs and they practically assured me that I will get approved and that everything will go as smoothly as possible up until closing... My priority is 'smooth closing process' - I won't fret about interest rates at this point... So I recently provided all the documents they asked for. My taxes are prepared by a CPA, so I don't expect any problems with my paperwork.

My biggest worry/concern is: what if I don't have all the cash necessary at the time of closing?
Lender assured me that they even have 10% down plans - which is very doable for me.
My question is, what if I am a little short - what if I have only like 8% or something for down payment at closing time?

I guess, what I mean to ask is: for a self-employed individual like myself, with 800+ credit score, and low D/I ratio, are there mortgage plans that allow for less than 10% down payment? If yes, how much?

Cash-flow is not a problem. Timing is the problem. I might have 8-9% by the currently scheduled closing time, i.e. Feb 2016... however, I will positively have 10% down-payment by Mar 2016...and 12% by Apr 2016...and so on...

Any feedback/comments/inputs will be highly appreciated.
Best,
DrD
Hello again CD experts,
I proceeded with my builder's lender, and provided all docs over the weekend - and today I received the eDisclosure.... and have been told to expect the decision by the underwriter by Monday - so things are moving fast, I guess.

I am trying to make sense of the 53 page eDisclosure... and it looks like my estimated APR will be 4.265%e for 30 year fixed rate conventional loan
My question is: Is that too high? or OK? I mean for my situation (self-employed), does this seem reasonable?

Thanks very much.
DrD

Last edited by DrD76; 07-22-2015 at 03:47 PM.. Reason: more details
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Old 07-23-2015, 08:28 AM
 
Location: MID ATLANTIC
7,856 posts, read 19,225,917 times
Reputation: 8679
Hi, late to the party, but 4.265% on a 90% loan isn't anything to worry about - it includes PMI, even on a "no pmi loan." When will the home be ready? When can you lock in? When that happens, thesenfigures are more important, but until then, these numbers are fluff.

You had asked if it were possible to buy with less down - yes, there are quite a few lenders that lend with 5% down up to 625K, and most are 10/1 or 7 year ARMs, with rigorous qualifying criteria.
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Old 07-23-2015, 08:31 AM
 
Location: Katy
264 posts, read 298,507 times
Reputation: 86
Quote:
Originally Posted by SmartMoney View Post
Hi, late to the party, but 4.265% on a 90% loan isn't anything to worry about - it includes PMI, even on a "no pmi loan." When will the home be ready? When can you lock in? When that happens, thesenfigures are more important, but until then, these numbers are fluff.

You had asked if it were possible to buy with less down - yes, there are quite a few lenders that lend with 5% down up to 625K, and most are 10/1 or 7 year ARMs, with rigorous qualifying criteria.
Thank you very much SmartMoney.
I have seen a lot of helpful advice from you on several posts on here, and I was looking forward to your response. So, Thank you for your inputs. Really appreciate it!
DrD
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