Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 07-08-2009, 05:47 AM
 
Location: Central CT, sometimes FL and NH.
4,523 posts, read 6,768,857 times
Reputation: 5927

Advertisements

I have heard comments on financial news stations that borrowers with good credit are a having difficulty getting loans and are being required to put down 20 or 30% even though they have excellent credit and have steady employment.

Is this true? I have been unable to find any hard data that confirms these claims.

Personally, I still see people coming through with FHA pre-quals for 97% financing and they are looking for seller closing concessions because they have little or no money to put down.

It would seem crazy that borrowers with good credit and sizable down payments would be denied loans whereas those with lower credit scores, income, and down payments would be given preference.

Is this accurate, false, or a localized phenomenon?
Reply With Quote Quick reply to this message

 
Old 07-08-2009, 05:54 AM
 
Location: Hoosierville
17,205 posts, read 14,492,063 times
Reputation: 11456
Quote:
Originally Posted by Lincolnian View Post
I have heard comments on financial news stations that borrowers with good credit are a having difficulty getting loans and are being required to put down 20 or 30% even though they have excellent credit and have steady employment.

Is this true? I have been unable to find any hard data that confirms these claims.

Personally, I still see people coming through with FHA pre-quals for 97% financing and they are looking for seller closing concessions because they have little or no money to put down.

It would seem crazy that borrowers with good credit and sizable down payments would be denied loans whereas those with lower credit scores, income, and down payments would be given preference.

Is this accurate, false, or a localized phenomenon?
Those FHA borrowers also have higher interest rates and pay PMI.

And I have not seen anyone with 20% down with 700+ scores get denied ... it's the ones with sketchy credit and no cash in hand that are having problems. Which, IMHO, is how it should've ALWAYS been.
Reply With Quote Quick reply to this message
 
Old 07-08-2009, 05:54 AM
 
Location: Summerville, SC
1,149 posts, read 4,200,235 times
Reputation: 1126
We are buying a house with an FHA 203K (needed for renovation). Great credit, obviously little down. The bank is payuing most of the closing costs. We had no problem getting approved for $400k on one income, but chose to go for a less expensive house. The only problem are the underwriters dealing with the EEM part of the 203k, they're ridiculously picky - using regular FHA 203k regulations for a streamline loan - hence, instead of the 45-60 day time window, we are past day 70 while they are still quibbling over which cabinets and faucet I chose - not even kidding.

Edit - as for what Chuckity said, our loan was 0.25% higher than a non-FHA - however, since it is 5%, it's less than what people are paying today. Not a huge deal, especially considering the price of the house (under $200k though it sold in late 2007 for almost $400k). Yes we pay PMI, which we will refinance out of ASAP
Reply With Quote Quick reply to this message
 
Old 07-08-2009, 08:39 AM
 
Location: 27609
525 posts, read 1,296,405 times
Reputation: 545
I put 0 down and was approved within minutes. Now, before anyone FLIPS out on me about getting 100% financing, it's not that I didn't HAVE the money - it's that I felt safer leaving it in the bank in this economy. I liked the idea of having the money to pay my mortgage for a couple of YEARS if need be with the money in the bank rather than putting it down and having lower monthlies. (I'm sure a bunch of people will argue with me on that, but I thought it through for months before we decided what to do)..but we also bought a home well within our means, have no debt and I've been at my job for 9 years at a company that is in pretty good shape all things considered. So I think the low or no down payment options are still out there - just harder to get I'm guessing.
Reply With Quote Quick reply to this message
 
Old 07-08-2009, 08:45 AM
 
Location: Barrington
63,919 posts, read 46,615,875 times
Reputation: 20674
When I hear that people with excellent credit scores, verifiable employment and adequate debt to income ratios and 20 or more percent downstrokes are being denied conventional mortgages, it tells me that they are not disclosing the truth.
Reply With Quote Quick reply to this message
 
Old 07-08-2009, 11:16 AM
 
57 posts, read 204,965 times
Reputation: 45
Quote:
Originally Posted by boocake View Post
I put 0 down and was approved within minutes. Now, before anyone FLIPS out on me about getting 100% financing, it's not that I didn't HAVE the money - it's that I felt safer leaving it in the bank in this economy. I liked the idea of having the money to pay my mortgage for a couple of YEARS if need be with the money in the bank rather than putting it down and having lower monthlies. (I'm sure a bunch of people will argue with me on that, but I thought it through for months before we decided what to do)..but we also bought a home well within our means, have no debt and I've been at my job for 9 years at a company that is in pretty good shape all things considered. So I think the low or no down payment options are still out there - just harder to get I'm guessing.

I'm with you...we are still employed at our great jobs (for which we are very thankful), have excellent credit and money to put down. In this environment, cash is king. We'll be buying a less expensive house, putting down the least amount possible -- and most likely using an FHA 203k if we find a short sale/REO to purchase. Yes, inflation will be picking up steam, but working capital is at a premium right now.
Reply With Quote Quick reply to this message
 
Old 07-08-2009, 12:06 PM
 
1,624 posts, read 4,861,649 times
Reputation: 1308
Quote:
Originally Posted by Lincolnian View Post

Is this accurate, false, or a localized phenomenon?
No. I just did some mortgage shopping for pre-qualifications purposes for a potential new purchase.

Most lenders only require 5% down for a convention mortgage ($417K or below) and 10% down for a jumbo loan ($417+). However, the rate if you put down 20% is between .3% to 1% lower and many more lenders are available. None of the places I inquired required PMI.

Most lenders indicated to me you needed about a 700 FICO score to qualify for these types of mortgages.

I also found plenty of places where you only needed 3% down, but those rates were higher. Some with PMI, other with no PMI.

So I would say it is probably accurate to say that it is difficult to get the absolutely lowest rates possible without 20% down, but you definitely have plenty of options if you have good credit, have at least 5% down, and are willing to pay a slighter higher interest rate.
Reply With Quote Quick reply to this message
 
Old 07-08-2009, 01:39 PM
 
5,458 posts, read 6,703,426 times
Reputation: 1814
Quote:
Originally Posted by middle-aged mom View Post
When I hear that people with excellent credit scores, verifiable employment and adequate debt to income ratios and 20 or more percent downstrokes are being denied conventional mortgages, it tells me that they are not disclosing the truth.
Subtle

I wonder if these stories are being spread by people who think "good credit" means that they can afford to pay the minimums on all of their debt each month, or by people who have a financial interest in lending standards returning to the credit bubble mania. The former are excused for just getting a bit too used to easy credit - the latter were and continue to be part of the problem.
Reply With Quote Quick reply to this message
 
Old 07-08-2009, 02:25 PM
 
57 posts, read 204,965 times
Reputation: 45
Hmm. I wonder if these stellar buyers are actually being denied credit, or are simply not qualifying for certain products. For instance, INGDirect (with whom we had a phenomenal experience last time around) only offers 5/1 and 7/1 ARMs and only with a 25% down payment. No down payment, no loan. Someone with excellent credit and a 5% down payment, but no military service or military family members will not be able to get a loan with USAA. Actually being denied a loan would mean credit scores probably aren't measuring up and it's time to ensure nothing has magically "appeared" on credit files.
Reply With Quote Quick reply to this message
 
Old 07-08-2009, 10:14 PM
 
Location: Ridgewood NJ
592 posts, read 2,185,201 times
Reputation: 316
Quote:
Originally Posted by boocake View Post
I put 0 down and was approved within minutes. Now, before anyone FLIPS out on me about getting 100% financing, it's not that I didn't HAVE the money - it's that I felt safer leaving it in the bank in this economy. I liked the idea of having the money to pay my mortgage for a couple of YEARS if need be with the money in the bank rather than putting it down and having lower monthlies. (I'm sure a bunch of people will argue with me on that, but I thought it through for months before we decided what to do)..but we also bought a home well within our means, have no debt and I've been at my job for 9 years at a company that is in pretty good shape all things considered. So I think the low or no down payment options are still out there - just harder to get I'm guessing.
smart man, you want to put as little down as possible. This will ensure you are liquid. If you lose your job, you can pay the mortgage for a few years using your 20% downpayment as you correctly stated. If sht hits the fan and your house loses 20%+ value, you can just walk away without losing much of the equity already put into the house (except your credit score) vs a 20% down payment.

Monthly pmi and higher interest rate is a small price to pay to remain liquid with cash on hand, especially in this new world.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages

All times are GMT -6. The time now is 02:20 AM.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top