Mortgage preapproval ? help!

[yoopermom]

Backstory: we sold our house almost 4 yrs ago when I was first laid off and have been looking ever since. We were preapproved at that time, but have since changed banks and haven't done any preapproval paperwork with our current bank.

Wouldn't you know it, a house on 40 acres that we desperately wanted to buy 13 yrs ago but couldn't afford at $189K has just gone into foreclosure and is for sale for $112K. We have a 40K downpayment (from sale of the former home) but our realtor is convinced it's going to sell megaquick due to the price.

AND we're leaving for out of state tomorrow a.m. for my DGM's 100th birthday weekend! I could pick up the paperwork from the bank before we leave to fill out, but...(here come the questions)

1. How long does preapproval take?
2. Would we be allowed to put in an offer even without it?
3. Even with me on layoff, I'm 99% sure the bank would still loan it to us on my DHs salary. Does the bank take into account my unemployment income?
4. My parents have offered to help out temporarily if that would help, would it?
5. We would sell the house we're currently in, but wouldn't want to wait on that to buy this one. Would the premortgage take this house's worth into account?

I REALLY want this house! DGM says she'll call the bank and tell them we're good for it.

Any advice would be appreciated!
Terri

 

[jmartinez1895]

First off, Happy birthday to your DGM.
I'm not an expert, and things do vary from state to state. I am only going by what we learned last year in our home search and what is common in Alabama.

1. Some banks offer 5 minute appovels and others have a more detailed system that can take weeks. Call local banks and ask about the normal turn around.
2.You can put an offer in on anything, but with forclosed properties they normally have a set list of items that you must have or criteria that you must meet for them to accept the offer.
3. Yes, because it is an income.
4.Only if they would be willing to co-sign on a loan 9 and then it would only help if they have good credit)
5.No, ( or at least no here) and they might even hold that against you because you will have 2 loans making you seem like a higher risk.

I hope that I have helped some and not discouraged you in any way. Try to get any and all paper work that you can and fill it out and fax it to the bank as soon as you get it done ( you might have to go to Kinkos or something, but it is worth it). I hope that you get the house and get your sold.

 

[yoopermom]

Thanks so much for the encouragement. I should have clarified that we do NOT have a loan on the house we're in now (it's tiny, don't be impressed ). So whatever we sell it for (which could take a while in this economic climate) will be put back onto the loan for the new house.

And GM's party should be a hoot! She's sharp as sharp can be, believe me, and would love to see us in our "dream house" for her bday present...

Terri

 

[Uniquely Young]

1. How long does preapproval take?
Several days
2. Would we be allowed to put in an offer even without it?
Not usually
3. Even with me on layoff, I'm 99% sure the bank would still loan it to us on my DHs salary. Does the bank take into account my unemployment income?
Questionable
4. My parents have offered to help out temporarily if that would help, would it?
If you offer cash and show proof of it at the time of your offer. How mich can your parents help out?
5. We would sell the house we're currently in, but wouldn't want to wait on that to buy this one. Would the premortgage take this house's worth into account?
Not in this market.

You have to realize there will be multiple offers for this property given what you have disclosed about it. It is a steal in that area. A hard cash offer on a foreclosure will beat out someone who is financing because all financing deals can fall thru (inspections, appraisals), even with a substantial down payment. Cash will beat even higher bidders. Co-signers won't do it.
But the good news is if you can come up with the cash, in 6 months and one day you can go to the bank for a home equity loan, pay back your parents back and have a reasonable amount to pay monthy on a property worth more than you paid for it. Since it is paid in full, you will be able to get up to 75% of its appraisal (done after the sale, not before, as the bank would require).
Questions to keep in mind are "Have they stripped or trashed the house since you looked at it 13 years ago?".
I wish you luck! We did it and beat out many people but we pulled the money from our business temporarily. Got the house of my dreams for 1/3 the cost but we learned a lot. We didn't do the HEL because we didn't have too but it was a possibilty.
Wishing you the best!

 

[TxRabbit]

Some foreclosure properties have rules regarding what is required in an offer on the property. This may or may not include a preapproval. Generally, HUD owned foreclosures are more strict about offers...other non-government bank owned properties will vary. If it is listed on MLS, then contact the listing agent for more information.

Preapproval by a bank can vary, like a PP said.

In general, you will be required to show that you intend to occupy the property you want to purchase in order to receive an interest rate that is appropriate to a primary residence. With such a small loan, you may qualify for it even with your current mortgage obligation in your debt ratios. If that's not possible, then, try looking into a product called a bridge loan. I'm not sure how they work, all I know is that, in the past, I've known people who couldn't qualify for two houses but were able to purchase the second house under some sort of conditional thing while one house was on the market. I don't even know if they do these loans anymore, but it would be worth researching.

Hope things work out for you.

 

[Uniquely Young]

Just read your last post. When you sell your house you will be ahead of the game since you owe nothing.
Move fast!

 

[yoopermom]

Thanks everyone again! I've literally been calling my parents and steps asking, "How much do you have in cash?" I *think* we might be able to scrape the difference together, but my DSM is in Jamaica on vacation, so have to wait til Monday to talk to her.

We would not get enough out of the sale of our current home to pay them completely back, but could take out a home equity loan for the difference, I would think.

Can't wait until the bank opens in the a.m.!

Terri

And yes, we're going to see the house on Sunday, to make sure of condition (my DH is a contractor, so super picky, no worries...)
Here's the MLS, in case anybody's wondering MLS#10-581

 

[Uniquely Young]

I don't even know you and I am excited for you. I was in the same situation. DH was out of town on Friday. I found the house the day it went on the market. I made an appointment to see it on Saturday. Made the offer that day verbally. They showed it about 20 more times that weekend but no offers could be submitted until Monday when the bank opened. Gave us enough time to get all the cash in our accounts that showed we did have it. Just a bank print out. They submitted all offers on Monday night. We had to wait until Friday to find out but the agent was sure cash would be the best offer, even with higher bids.
I really hope you get your house of your dreams!
Good Luck.

 

[yoopermom]

Thanks unique, that's the joy of the Disboards, we all get excited for each other all the time.

We'll see....

Terri

 

[Soon2B4]

We were able to get pre approved by our bank over the phone in less than an hour in October. The one thing I will say about cash from you parents is it can cause problems. We received cash from my MIL from a settlement. When we went to finance, the bank wanted to know where the money came from. They want to make sure it isn't a loan that you will have to pay back, essentially a second loan payment. Good luck!

 

[clutter]

The major banks can pre-approve you immediately from an online application. Find one that has a loan officer in your area, give him/her a call. They'll have you complete the application on-line and should be able to give you a pre-approval letter same day.

 

[ssawka]

When we went for pre-approval, about 12 years ago, they wer mostly concerned with our monthly bills and not with how much money we had in the bank. In fact, they told us that paying off debt wouldn't help unless you were paying off in full, because it would not effect your monthly payment.

I would say to get pre-approved from one of the major banks or mortgage lenders (GMAC, Countrywide, etc.). Even if you need to start a loan with them, you could always refinance down the line.

 

[MickeyHereWeCome!]

Times may have changed, but with regard to getting cash from your parents, they will most likely have to sign a "gift letter", basically stating that it is not a loan and will not have to be paid back.

 

[Soon2B4]

Times may have changed, but with regard to getting cash from your parents, they will most likely have to sign a "gift letter", basically stating that it is not a loan and will not have to be paid back.

That still is true. If your parents help, make sure you have that letter before you try to get your pre-approval. It will make things go smoother.

 

[cm8]

That still is true. If your parents help, make sure you have that letter before you try to get your pre-approval. It will make things go smoother.

and good luck!!

 

[SandrA9810]

Just make sure the gift doesn't exceed the tax allowance. After so many thousands, you'll have to pay taxes on the money that was given to you. And you will need that gift letter.

Cash bids will more than likely win out pre-approval loan letters.
1. cash
2. convential loans
3. FHA loans
4. Downpayment Assistance Programs

When the house is in forclosure, and it is appraised for selling, if you offer more than what it is appraised at, an FHA loan will only allow you to borrow for the appraised price and anything above that has to be paid in cash.
Ex: house put on the market for 100K. You see, you bid for 110K, your offer is accepted. Appraisal comes in at 95K. Well you have to come up with 15K cash for the difference.

Usually a bank will accept offers for a few days, and more offers are turned in monday than the rest of the week.

I hope you get it. And if you do, you can sell your old house without a problem.

 

[dd50]

Just make sure the gift doesn't exceed the tax allowance. After so many thousands, you'll have to pay taxes on the money that was given to you. And you will need that gift letter.

Cash bids will more than likely win out pre-approval loan letters.
1. cash
2. convential loans
3. FHA loans
4. Downpayment Assistance Programs

When the house is in forclosure, and it is appraised for selling, if you offer more than what it is appraised at, an FHA loan will only allow you to borrow for the appraised price and anything above that has to be paid in cash.
Ex: house put on the market for 100K. You see, you bid for 110K, your offer is accepted. Appraisal comes in at 95K. Well you have to come up with 15K cash for the difference.

Usually a bank will accept offers for a few days, and more offers are turned in monday than the rest of the week.

I hope you get it. And if you do, you can sell your old house without a problem.

You don't have to come up with $15k you could walk away or they could come down $15k.

Conventional will only let you purchase for appraised value also. If you want to purchase for more you have to bring the cash.

 

[SandrA9810]

Yeah, I know you have the option to back out, and the bank has the option to go with the appraisal price. If your offer is pulled out, they gotta go through the whole process again. The realtor that I was talking to, told me its half and half whether the bank will will start the process over. But if some one really wants the property, like the OP seems to want it, being able to come up with the difference gives you the best chance of getting that property.
And HUD homes can not sell for more than the appraised value, no matter what the highest bidder offered.

And on a side note, you're probably a little late for getting the tax credit. It says you have to have a signed contract before the 30th, and well apparently banks are really slow about sending the contracts back to be signed. And can take a couple of weeks to get to that point.

 

[PixieTopaz]

Times may have changed, but with regard to getting cash from your parents, they will most likely have to sign a "gift letter", basically stating that it is not a loan and will not have to be paid back.

On a conventional loan you need 10% downpayment minimum-only 5% can be a gift from a family member

 

[Soon2B4]

On a conventional loan you need 10% downpayment minimum-only 5% can be a gift from a family member

It depends on the bank on how much you have to put down for conventional. The bank my husband works for wanted 10%, but our other bank did conventional with only 5% down.