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Old 09-25-2012, 12:24 PM   #1
kiki02
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Mortgage approval...

is anyone (with good credit) having a hard time getting a mortgage now or ?

I keep hearing this, but might be making the plunge soon... wondering how good or bad it is.
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Old 09-25-2012, 12:34 PM   #2
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The issue is appraisals/home values, not really credit.

Many people have an unreasonable view of the market value of their home. They think its worth $100 beacuse that's what they're assessed at. Appraisal comes in at $95. They owe $80 on the mortgage and want to refi it. They have to come up with $4 to pay down the mortgage to bring it down to an 80% loan-to-value ratio or no refi (at the best rates).

Same thing can happen for people trying to buy homes....buyer or seller have to budge in order to get the mortgage.
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Old 09-25-2012, 01:05 PM   #3
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I am currently refinancing and at the waiting for appraisal stage. We did not have an issue with underwriting approval so far. We each have 787+ credit scores (average Of the 3 agencies) We do not have substantial cash on hand but have decent assets like stocks and retirement. Like the pp said for us it will come down to the appraisal. Last year (9 months ago)my home appraised at. $540k. We have done some improvements like adding a full bath so I am hoping it will come in around the same. Truth be told it only needs to come in around $515k. Fingers crossed. I hope this helps. This is with our credit union (whose 30 yr rate dropped to 2.85% today). Woo hoo
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Old 09-25-2012, 01:18 PM   #4
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As others have said, the appraisal is the issue. We don't have stellar credit - no black marks but limited record - but when we looked into a home equity line for some improvements that we would like to have done ASAP the obstacle wasn't the loan approval, it was getting the appraisal to come back high enough.

In our case we don't owe anything on the house, but the minimum credit line our bank will open is 25K and our appraisal isn't going to come in high enough for their 60% LTV requirement for a HELOC as first mortgage.
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Old 09-25-2012, 04:23 PM   #5
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We are in the middle of a refi and everything is ok with approvals and such. However, the appraisal has 2 numbers. The cost of rebuilding it at current costs, and then the way your house compares to recent sales. Obviously, they go with the lower of the 2 for your appraisal. Our house was appraised $100K less than the "rebuild" estimate. We only owe 1/2 of the value, so it's not a big deal, but I could see how it would be for someone trying to do a cash out refi.
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Old 09-25-2012, 07:08 PM   #6
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Quote:
Originally Posted by kiki02 View Post
is anyone (with good credit) having a hard time getting a mortgage now or ?

I keep hearing this, but might be making the plunge soon... wondering how good or bad it is.
We have a great credit rating, but I felt like we were literally documented TO DEATH over every little thing this time around. When we bought our first home at the beginning of the "bubble", it was a literal snap compared to our experience this time.

We have like triple the income, a much longer credit history (score was great back then too), and we aren't first time home owners. We were going through the process this time around, and I was really getting irritated with the underwriters.... this was an example of one of the requests I had.

"Can we get a copy of that check where you paid your off $30 dollar (insert department store here) account in April?" Me: "Yes. But you can see that we pay off that account in full monthly and have since it was opened in - oh, the early 2000's, right?" Underwriter: "Oh, yes, I guess that is true...."

It went on, and on, and on. There just seemed to be a huge disconnect what they should be able to see on our application, the documents they gave us, and our credit reports / scores (I got copies of them - they were perfect!). They seemed to just want to document out the wazoo before they went to closing. It wasn't the pre-approval or approval that was the pain - it was getting the ducks in a row before going to actual close.

We got a great rate, but it was a huge pain. They never said it, but I think that they did all of that because we had a second house that we were renting out. We were unable to sell it previously, so we were renting it. But we had great incomes, the house was rented and it had been occupied for over a year, and we were able to document that income. So it shouldn't have mattered. And we were buying the second home for way under what we were approved for - so I was still surprised at all of that. Thankfully, we sold that first house just a few months after moving into our new home! It all worked out in the end.
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Old 09-25-2012, 07:45 PM   #7
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My sister went through this last year. She had to even get Peters from both of my grandparents that the money they have for a Christmas gift was a gift and it had nothing to do with buying the house. It is ridiculous
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Old 09-25-2012, 09:01 PM   #8
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We recently refinanced and had no problems, however we have quite a bit of equity in the house since we bought well before the boom and live in an area where the economy is still good.
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Old 09-25-2012, 09:11 PM   #9
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YES! I have a score in the mid 700s so I am not considered a credit risk score wise. However my debt to income ratios were bad. I did not have a 20% DP so I needed a FHA loan, well due to those ratios I couldn't get a loan! My student loans were HUGE (don't be fooled into thinking they are good debt) and prevented the mortgage from happening. I backed outs saved some more and now have a 15% DP and a conventional loan. My student loans were paid in full this year so my debt to income is now 0. I have an offer in on a short sale so fingers crossed it all goes through!
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Old 09-26-2012, 05:06 AM   #10
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I work at a small credit union, and honestly it's really hard to get a mortgage with us. I'm not sure we would have got one if we didn't work there, and now we're doing our re-fi through the credit union and it's the same thing.

They *need* two solid years of work history that's steady. If you're self employed they need 2+ years of tax returns showing your income (and can only go off what you report as income). They really frown on not having 20% down, and while they'll give it to you at up to 90% LTV if your house has lost any value, that can be a huge hurdle for some people and at the 80-90% LTV you're paying PMI.

And then there's your loan to debt ratio... everything we take at this point in the eyes of management needs to be able to be sold to Fannie Mae/Freddie Mac thus the debt ratio needs to come in low or there will be problems. This hasn't been a problem with us, but I do understand that it comes into play with people with student loans, car loans, and the like. Or if you live in a more expensive area of the country were the debt ratio on a mortgage is normally higher (like Southern California)

So to answer your question, it's hard but not impossible. But it's a lot more than just your credit score they're looking at.
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Old 09-26-2012, 06:24 AM   #11
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Quote:
Originally Posted by Woth2982 View Post
I have an offer in on a short sale so fingers crossed it all goes through!
Fingers crossed for you!

We are buying a short sale right now. It took 8 loonnnggg months to get bank approval. The initial offer was done in mid-January and we are hoping to close by the end of October.

Good Luck!!
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Old 09-26-2012, 06:35 AM   #12
kiki02
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they never said it, but why would they care if you owned a second home. did you have a mortgage on it? it's income... !

banks are getting really annoying!!!!




Quote:
Originally Posted by sookie View Post
We have a great credit rating, but I felt like we were literally documented TO DEATH over every little thing this time around. When we bought our first home at the beginning of the "bubble", it was a literal snap compared to our experience this time.

We have like triple the income, a much longer credit history (score was great back then too), and we aren't first time home owners. We were going through the process this time around, and I was really getting irritated with the underwriters.... this was an example of one of the requests I had.

"Can we get a copy of that check where you paid your off $30 dollar (insert department store here) account in April?" Me: "Yes. But you can see that we pay off that account in full monthly and have since it was opened in - oh, the early 2000's, right?" Underwriter: "Oh, yes, I guess that is true...."

It went on, and on, and on. There just seemed to be a huge disconnect what they should be able to see on our application, the documents they gave us, and our credit reports / scores (I got copies of them - they were perfect!). They seemed to just want to document out the wazoo before they went to closing. It wasn't the pre-approval or approval that was the pain - it was getting the ducks in a row before going to actual close.

We got a great rate, but it was a huge pain. They never said it, but I think that they did all of that because we had a second house that we were renting out. We were unable to sell it previously, so we were renting it. But we had great incomes, the house was rented and it had been occupied for over a year, and we were able to document that income. So it shouldn't have mattered. And we were buying the second home for way under what we were approved for - so I was still surprised at all of that. Thankfully, we sold that first house just a few months after moving into our new home! It all worked out in the end.
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Old 09-26-2012, 06:48 AM   #13
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From my understanding, you need two years of rental history before it is considered income for financing purposes. Otherwise it's just debt/liability.

The banks are very tight right now and are requiring ridiculous amounts of documentation - even for well-qualified, good credit buyers putting 20% down. For those with little cash or a high debt to income or shaky credit, it's extremely difficult to get a loan. And for good reason. I don't necessarily like it, but I understand it. Back during the bubble, banks were handing out loans like candy and look where that got us. Now things are a too regulated; there needs to be a happy medium somewhere.
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Old 09-26-2012, 11:27 AM   #14
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Quote:
Originally Posted by Kristi1357 View Post
Fingers crossed for you!

We are buying a short sale right now. It took 8 loonnnggg months to get bank approval. The initial offer was done in mid-January and we are hoping to close by the end of October.

Good Luck!!
Thank you! Good luck to you too! The bank negotiator was assigned almost two weeks ago, so I am HOPING it starts to pick up! I am lucky that I can wait it out and very willing to do so to get a "steal". The longer it takes I figure the more time I have to save!
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Old 09-26-2012, 12:07 PM   #15
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We bought a house in March (our first home) and didn't have any problems at all, it really didn't seem difficult. We used a VA loan and I had heard that the process would take longer for that and require more documentation, but it was actually really easy and that was even with me using a power of attorney for my DH since he's deployed. They didn't question anything in our credit history and I didn't have to explain our income hardly at all despite it being a little difficult to follow with the deployment.

I did use a real estate agent recommended by my bank who walked me through everything and really knew her stuff, then she recommended the inspectors and arranged everything with them and she knew a closing attorney familiar with VA loans so we used her. I think their "network" saved me alot of work and hassle.
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