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As the poster above said, there are maximum amounts. But if they go do an FHA loan, then yes, it will help. Before they try another lender, they should ask their current lender if they can use the same app and docs for the FHA app.
PMI has changed drastically. Most of the insurance companies have designated certain areas as declining markets and have imposed some pretty strict criteria. FHA is a good suggestion. Somethign I didn't see mentioned is FHA allows for a co-signer, in the event of a lack of income. Another alternative is an 80/10/10, meaning an 80% first and a 10% second. By breaking it up into two loans, no PMI is needed.
This is a classic reason why one should stay with local lender. Agents in my market actually recommend against accepting contracts with lender letters that are not local. After all, how big is a threat of "I'll make sure everyone in my office hears about this!" if they are 6 states over? Also, some certain named big box banks have worn out their welcome, too. Anyone that has ever tried to get someone in management, knows about what I speak. LOL, I was in a KW office when they called a local big box banking branch office to complain about their closing figures being off. Their reply? "Tell the agents to split it."
While many probles are universal, many have local solutions. It helps to know the city and state where the property is located.
It looks like our buyers are over the max. for the FHA for our area. It's in the midwest, but we are in an area of growth in the market surprisingly. Growth, of course, being relevant to this cruddy market.
So realistically, what's the chances of us still getting to close on the house? Given these circumstances, is it even possible? Have you ever seen this happen, and still have it turn around for the better?
Just found out today that buyers are using investments to put down 20%. Oh good grief, I hope this works out. Closing rescheduled for sometime within next two weeks. Looks like credit scores hurt their chances for PMI. Would credit scores impact the loan with 20 down, too?
Why aren't they trying to do an 80/10/10? Two liens, no PMI, same 10% down payment... If they can't get the second lien, there are issues they're not telling you.
Just found out today that buyers are using investments to put down 20%. Oh good grief, I hope this works out. Closing rescheduled for sometime within next two weeks. Looks like credit scores hurt their chances for PMI. Would credit scores impact the loan with 20 down, too?
Each time you change the scenario, the lender must run the loan thru their underwriting system. Most lenders use DU or DO, for Fannie and Freddie. A few have their own proprietary systems, but today, 95% of all lenders use automated underwriting. And here is where things get tricky.
Your buyers are now liquidating assets and putting 20% down. So now, you take away those assets, assets that could have been used as reserves in the prior approval. The lender needs to make sure they deduct those assets because they won't be there. But wait! In preparing for the move, the buyer put the moving truck on his VISA and when they updated the credit report, it added an additional $200 to his debts (could be why the score was down, but we hope the 20% down will offset any changes). My point: in today's environment, the approval is only as good as the operator inputting the data. When you have many changes to a loan, it gets complicated. To even further complicate matters, some investors will put a limit on how many times you can run the loan thru those automated systems! (SunTrust is one).
The industry has made the rules about as complicated as they can get....and the investors have put the loans under the strongest microscope available.
Most lenders wouldn't drag this out if the loan couldn't be done. 20% down tolerates lower scores than 10% down. If this were an out of town, unknown lender, most of my Realtors would only have recommended the contract be extended only if the buyer agreed to transfer their loan to someone local and known to the Realtors in the transaction.
I agree with everything SmartMoney said... I tried to indicate this above- no mattter what the borrower does, it will impact their loan application and underwriting- specifically liquidating assets. And yes, every realtor in the world would recommend an extension of the loan contingency.
FalconheadWest- 80/10 with 10 down loans aren't readily available these days. That is the best route, but if they were easy to obtain, NO ONE would bne paying PMI (sory of what happened just a few years ago). Lenders do not want to do that. Them not being able to get a piggyback loan is not an indication, in my opinion, that anything is wrong here.
That said, sounds like spoke with their lender and are going to try and work things out. Goodluck!
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