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Is no-doc mortgage my only option?
|
|
|
| Hello group!
Looking for some advise or maybe just an opinion from the pros in this
group.
Trying to buy (build, actually) a house in a development that's about 800
feet from where I live now. One of my ideas is to settle on the new home
BEFORE selling the one I live in now.
With the house delivery date being kind of soft (30 days window being
promised, but I guess, 60 days delays can also be expected) and with the
new home being in such close proximity, I thought it would make it a
little easier on my family if we live in the current home until everything
is ready to go in the new one.
Problem arose when trying to apply for a mortgage. The broker is pretty
much saying that the sale of the current home is mandatory, and I have to
settle on the old house before the new one. This is a deal breaker for me.
I do not want to move to a temp place, and renting it back from the buyer
will limit my chances of selling on this, already cooling off, market.
The broker is saying that the problem is not paying two mortgages for few
months (which is also tough to approve, although I can temporarily afford
it) but the liability of the first mortgage. Unless I did not understand
the explanation, it seems like having the additional liability of the
first mortgage will not allow any lender to lend me money, no matter if I
can pay monthly or not.
Someone had mentioned no-doc mortgages to me. I don't know much about
them, but it sounds like no-doc would mean that no other mortgage will be
taken into consideration. Is this an option for me? Well, is no-doc my
ONLY option? I understand that those are more expensive mortgages (how
much more?), but I would be re-financing it right after the sale of the
current home. Hopefully within 4-6 months. Is there something wrong with
this plan?
Cheers!
D.
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| |
| Peter 2005-11-08, 12:21 pm |
| Are you building the home yourself or is the development building the home?
Did you try more than one mortgage broker? Why are you moving?
You should be able to purchase the new home contingent on selling the old
home.
Where's the delay? Modern construction is based on timetables. A
contractor should be able to tell you within two or three days when a home
is ready for occanpancy.
My feeling is that you do not have the right information before you. Forget
the no-doc loan.
PMT
"DA" <rcdd_at_teledatasystems_dot_com@foo.com> wrote in message
news:436ee02e$1_4@alt.athenanews.com...
> Hello group!
>
> Looking for some advise or maybe just an opinion from the pros in this
> group.
>
> Trying to buy (build, actually) a house in a development that's about 800
> feet from where I live now. One of my ideas is to settle on the new home
> BEFORE selling the one I live in now.
>
> With the house delivery date being kind of soft (30 days window being
> promised, but I guess, 60 days delays can also be expected) and with the
> new home being in such close proximity, I thought it would make it a
> little easier on my family if we live in the current home until everything
> is ready to go in the new one.
>
> Problem arose when trying to apply for a mortgage. The broker is pretty
> much saying that the sale of the current home is mandatory, and I have to
> settle on the old house before the new one. This is a deal breaker for me.
> I do not want to move to a temp place, and renting it back from the buyer
> will limit my chances of selling on this, already cooling off, market.
>
> The broker is saying that the problem is not paying two mortgages for few
> months (which is also tough to approve, although I can temporarily afford
> it) but the liability of the first mortgage. Unless I did not understand
> the explanation, it seems like having the additional liability of the
> first mortgage will not allow any lender to lend me money, no matter if I
> can pay monthly or not.
>
> Someone had mentioned no-doc mortgages to me. I don't know much about
> them, but it sounds like no-doc would mean that no other mortgage will be
> taken into consideration. Is this an option for me? Well, is no-doc my
> ONLY option? I understand that those are more expensive mortgages (how
> much more?), but I would be re-financing it right after the sale of the
> current home. Hopefully within 4-6 months. Is there something wrong with
> this plan?
>
>
> Cheers!
> D.
> -------------------------------------
>
>
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| |
|
| Peter wrote:
> Are you building the home yourself or is the development building the
> home?
> Did you try more than one mortgage broker? Why are you moving?
> You should be able to purchase the new home contingent on selling the
> old
> home.
> Where's the delay? Modern construction is based on timetables. A
> contractor should be able to tell you within two or three days when a
> home
> is ready for occanpancy.
> My feeling is that you do not have the right information before you.
> Forget
> the no-doc loan.
Thank you for the insight, Peter.
Yes, I do not have too much info to play with. However, from what I have
been told, the situation unfolds like this:
I have to sign the contract with the development company (they build it,
not me) BEFORE I know for sure the house delivery dates. They are going to
be released to me about a month after I sign the contract and pay the
deposit on a pre-construction meeting. Actually, the delivery dates are
preliminary like anything else in building construction, and they are
contingent upon the weather to some extent.
So, I'm facing a dilemma: how do I know when my old house is going to
sell? Even if I put it on the market below the average, there is no
guarantee that it will sell precisely at the time I need it.
I did consider the entire deal with the new house out of my desire to live
in a larger and newer house, not to suffer all the way thru the process.
This is where my desire to buy the new home BEFORE selling the old one
comes from.
With this timing, I have been told that I absolutely have to settle on my
old house BEFORE I can settle on the new one, which will force me to move
to a temporary place, and this is exactly what I want to avoid.
I am very sure my situation is not unique. So, the big question is: how do
other people do that?
Cheers!
D.
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| |
| Jeff Strickland 2005-11-08, 10:21 pm |
| It sounds to me like you are not understanding something, the liability of
the existing 1st isn't an issue in and of itself. The trouble is that while
YOU think you can make two payments for a while, your income and reserves
apparently do not support this view.
Your crecdit is apparently very good, and the loan officer is saying if you
go No Doc, then you say you are a brain surgeon, and you make $20,000 a
month, and everybody looks at this and says, it's possible, and they let the
loan go through. It would be difficult to say that you are a greeter at
WalMart making $20 k a month. On a No Doc, nobody looks at your assets and
reserves, and if your income is in line with yoru profession, then you're in
good shape.
Your problem isn't the other mortgages you have, the problem is the monthy
out-flow of cash relative to your income.
I suggest you take the No Doc, and consider getting it as an Interest Only
for 5 years, or so. You get a fixed rate payment for 5 years, and this
should be ample breathing room for getting your stuff done and selling the
existing home. I also suggest you convert your existing home to rental
property.
"DA" <rcdd_at_teledatasystems_dot_com@foo.com> wrote in message
news:436ee02e$1_4@alt.athenanews.com...
> Hello group!
>
> Looking for some advise or maybe just an opinion from the pros in this
> group.
>
> Trying to buy (build, actually) a house in a development that's about 800
> feet from where I live now. One of my ideas is to settle on the new home
> BEFORE selling the one I live in now.
>
> With the house delivery date being kind of soft (30 days window being
> promised, but I guess, 60 days delays can also be expected) and with the
> new home being in such close proximity, I thought it would make it a
> little easier on my family if we live in the current home until everything
> is ready to go in the new one.
>
> Problem arose when trying to apply for a mortgage. The broker is pretty
> much saying that the sale of the current home is mandatory, and I have to
> settle on the old house before the new one. This is a deal breaker for me.
> I do not want to move to a temp place, and renting it back from the buyer
> will limit my chances of selling on this, already cooling off, market.
>
> The broker is saying that the problem is not paying two mortgages for few
> months (which is also tough to approve, although I can temporarily afford
> it) but the liability of the first mortgage. Unless I did not understand
> the explanation, it seems like having the additional liability of the
> first mortgage will not allow any lender to lend me money, no matter if I
> can pay monthly or not.
>
> Someone had mentioned no-doc mortgages to me. I don't know much about
> them, but it sounds like no-doc would mean that no other mortgage will be
> taken into consideration. Is this an option for me? Well, is no-doc my
> ONLY option? I understand that those are more expensive mortgages (how
> much more?), but I would be re-financing it right after the sale of the
> current home. Hopefully within 4-6 months. Is there something wrong with
> this plan?
>
>
> Cheers!
> D.
> -------------------------------------
>
>
> ##-----------------------------------------------##
> Delivered via http://www.equity-loan.info/
> Your home, its financing and everything about it
> Web and RSS access to your favorite newsgroup -
> alt.org.natl-assn-mortgage-brokers - 358 messages and counting!
> ##-----------------------------------------------##
| |
|
|
Jeff Strickland wrote:
> It sounds to me like you are not understanding something, the liability
> of
> the existing 1st isn't an issue in and of itself. The trouble is that
> while
> YOU think you can make two payments for a while, your income and
> reserves
> apparently do not support this view.
> Your crecdit is apparently very good, and the loan officer is saying if
> you
> go No Doc, then you say you are a brain surgeon, and you make $20,000 a
> month, and everybody looks at this and says, it's possible, and they
> let the
> loan go through.
Thank you for your suggestions, Jeff.
I have to admit, I do not understand something here. You’d think this is a
very common situation, and not only brain surgeons should be able to
accomplish that. Millions of people move every year in this country, and
many consider moving from the old house directly into the new one without
renting in between. How is it normally done? I would also have to admit
that I might be lazier than most, but I am ready to pay (if it does not
cost an arm and a leg, obviously) for the convenience of not having to
rent a temp place. The construction and its schedule introduces an
additional twist, but in the end it would be very similar to what anyone
moving from one house to another have to go through. Additionally, I don’t
want to keep the old place (no desire to become a landlord), so I would be
willing to get rid of the first mortgage as soon as I’m moved out and the
house sells, but how do you tell WHEN it sells if you’d want to add a
clause (sell within xx days) to a mortgage app (I don’t know if it’s even
possible to add such clause)
Although no-doc looks more and more like the only option, I’m still
looking for creative ways to accomplish the goal.
Cheers!
D.
-------------------------------------
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| |
| Jeff Strickland 2005-11-09, 9:21 pm |
|
"DA" <rcdd_at_teledatasystems_dot_com@foo.com> wrote in message
news:43715fe4$1_1@alt.athenanews.com...
>
> Jeff Strickland wrote:
>
>
>
>
> Thank you for your suggestions, Jeff.
>
> I have to admit, I do not understand something here. You'd think this is a
> very common situation, and not only brain surgeons should be able to
> accomplish that. Millions of people move every year in this country, and
> many consider moving from the old house directly into the new one without
> renting in between. How is it normally done? I would also have to admit
> that I might be lazier than most, but I am ready to pay (if it does not
> cost an arm and a leg, obviously) for the convenience of not having to
> rent a temp place. The construction and its schedule introduces an
> additional twist, but in the end it would be very similar to what anyone
> moving from one house to another have to go through. Additionally, I don't
> want to keep the old place (no desire to become a landlord), so I would be
> willing to get rid of the first mortgage as soon as I'm moved out and the
> house sells, but how do you tell WHEN it sells if you'd want to add a
> clause (sell within xx days) to a mortgage app (I don't know if it's even
> possible to add such clause)
>
> Although no-doc looks more and more like the only option, I'm still
> looking for creative ways to accomplish the goal.
>
You're right, millions of people move every year. But they sell one house
first. You are trying to keep one house and build a second one at the same
time. This exposes you to two mortgage payments for some unknown period of
time. Most people make a purchase with a contingency that the existing
residence be sold within some period of time. The vast majority of buyers
buy properties that are essentially ready to be moved into. When they buy
homes that are under construction, then they have some lag time to deal with
that can only be resolved by renting somewhere.
Put the existing house on the market, and if it sells and closes before the
new house is finished, then you have to be prepared to move into an
apartment for a couple of months, or rent the house back from the buyers if
they agree.
| |
| Jeff Strickland 2005-11-09, 9:21 pm |
|
"DA" <rcdd_at_teledatasystems_dot_com@foo.com> wrote in message
news:4370ffbe$1_5@alt.athenanews.com...
> Peter wrote:
>
>
>
>
>
>
> Thank you for the insight, Peter.
>
> Yes, I do not have too much info to play with. However, from what I have
> been told, the situation unfolds like this:
>
> I have to sign the contract with the development company (they build it,
> not me) BEFORE I know for sure the house delivery dates. They are going to
> be released to me about a month after I sign the contract and pay the
> deposit on a pre-construction meeting. Actually, the delivery dates are
> preliminary like anything else in building construction, and they are
> contingent upon the weather to some extent.
>
TAKE ANY DATE THEY GIVE YOU WITH A GRAIN OF SALT.
They almost NEVER meet the deadlines they give. My home was supposed to be
finished by sometime in August, it wasn't ready for me to move in to until
November 1st. They were late by at least two full months, plus a couple of
weeks.
| |
| Grover C. McCoury III 2005-11-09, 10:21 pm |
| With a true "no-doc" loan, the lender is qualifying you based upon your
credit report alone - you do not have to show an employer nor do you have to
show assets/income on the loan application. Therefore, all information on
your credit report, including any existing mortgages, will be considered
during the qualification process. "No-doc" loans are generally only
available to those with excellent credit scores/reports.
Your options are as follows:
1) Apply for the new home as an investment property - must qualify to carry
both mortgages
2) Apply for the new home as a primary residence and rent the one that you
currently own showing a lease/first rent payment as evidence - *some* of the
rental income will be used to offset your current mortgage payment
3) Apply for the new home as a primary residence and sell the one that you
currently own before closing on the new home
4) Apply for the new home as a primary residence, get a
construction/permanent loan and agree to sell your primary residence before
you take possession of the newly constructed home. You must deliver a
HUD1(settlement) statement before modification from a construction to
permanent mortgage (i.e., when house is completed).
"DA" <rcdd_at_teledatasystems_dot_com@foo.com> wrote in message
news:436ee02e$1_4@alt.athenanews.com...
> Hello group!
>
> Looking for some advise or maybe just an opinion from the pros in this
> group.
>
> Trying to buy (build, actually) a house in a development that's about 800
> feet from where I live now. One of my ideas is to settle on the new home
> BEFORE selling the one I live in now.
>
> With the house delivery date being kind of soft (30 days window being
> promised, but I guess, 60 days delays can also be expected) and with the
> new home being in such close proximity, I thought it would make it a
> little easier on my family if we live in the current home until everything
> is ready to go in the new one.
>
> Problem arose when trying to apply for a mortgage. The broker is pretty
> much saying that the sale of the current home is mandatory, and I have to
> settle on the old house before the new one. This is a deal breaker for me.
> I do not want to move to a temp place, and renting it back from the buyer
> will limit my chances of selling on this, already cooling off, market.
>
> The broker is saying that the problem is not paying two mortgages for few
> months (which is also tough to approve, although I can temporarily afford
> it) but the liability of the first mortgage. Unless I did not understand
> the explanation, it seems like having the additional liability of the
> first mortgage will not allow any lender to lend me money, no matter if I
> can pay monthly or not.
>
> Someone had mentioned no-doc mortgages to me. I don't know much about
> them, but it sounds like no-doc would mean that no other mortgage will be
> taken into consideration. Is this an option for me? Well, is no-doc my
> ONLY option? I understand that those are more expensive mortgages (how
> much more?), but I would be re-financing it right after the sale of the
> current home. Hopefully within 4-6 months. Is there something wrong with
> this plan?
| |
|
| Jeff Strickland wrote:
> TAKE ANY DATE THEY GIVE YOU WITH A GRAIN OF SALT.
> They almost NEVER meet the deadlines they give. My home was supposed to
> be finished by sometime in August, it wasn't ready for me to move in to
> until November 1st. They were late by at least two full months, plus a couple
> of weeks.
Well, I am familiar with this side of construction business, although my
company only deals with commecrial construction. This is exactly what made
me think of moving first and then selling the old house.
I guess, I will be looking for more information on no-doc mortgages
because this is where this looks to be going.
Thanks for your responses!
Cheers!
D.
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| |
|
| Grover C. McCoury III wrote:
> With a true "no-doc" loan, the lender is qualifying you based
> upon your
> credit report alone - you do not have to show an employer nor do you
> have to
> show assets/income on the loan application. Therefore, all information
> on
> your credit report, including any existing mortgages, will be
> considered
> during the qualification process. "No-doc" loans are
> generally only
> available to those with excellent credit scores/reports.
> Your options are as follows:
> 1) Apply for the new home as an investment property - must qualify to
> carry
> both mortgages
> 2) Apply for the new home as a primary residence and rent the one that
> you
> currently own showing a lease/first rent payment as evidence - *some*
> of the
> rental income will be used to offset your current mortgage payment
> 3) Apply for the new home as a primary residence and sell the one that
> you
> currently own before closing on the new home
> 4) Apply for the new home as a primary residence, get a
> construction/permanent loan and agree to sell your primary residence
> before
> you take possession of the newly constructed home. You must deliver a
> HUD1(settlement) statement before modification from a construction to
> permanent mortgage (i.e., when house is completed).
Thank you for suggestions, Grover.
Let me re-phrase that: you are saying that no-doc mortgage IS NOT an
option for me because the first mortgage will, obviously, show in my
credit report. Is that correct?
Also, this has been mentioned couple times here, but what is considered a
good credit score in relation to no-doc mortgage application? I mean, it
can go all the way up to mid 800s. Is 800+ what gets considered?
And, lastly, if no-doc is not the option, applying for the new one as an
investment property seems the way to go. Is the application process any
different? I guess, I would have to say that in WILL NOT become my primary
residence then. What would happen if I actually move in?
Thanks!
Cheers!
D.
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| |
| Jeff Strickland 2005-11-11, 9:21 pm |
|
"DA" <rcdd_at_teledatasystems_dot_com@foo.com> wrote in message
news:43739428$1_3@alt.athenanews.com...
> Grover C. McCoury III wrote:
>
>
>
>
> Thank you for suggestions, Grover.
>
> Let me re-phrase that: you are saying that no-doc mortgage IS NOT an
> option for me because the first mortgage will, obviously, show in my
> credit report. Is that correct?
>
> Also, this has been mentioned couple times here, but what is considered a
> good credit score in relation to no-doc mortgage application? I mean, it
> can go all the way up to mid 800s. Is 800+ what gets considered?
>
> And, lastly, if no-doc is not the option, applying for the new one as an
> investment property seems the way to go. Is the application process any
> different? I guess, I would have to say that in WILL NOT become my primary
> residence then. What would happen if I actually move in?
>
> Thanks!
>
> Cheers!
> D.
I don't understand your aversion to a No Doc Loan. It sounds to me like the
perfect solution for you. Get a 5/1 Interest Only with no prepayment
penalty. This gives you a 5-year fixed rate interest only loan that should
be more than managable even with your other mortgage. Once you move in, you
make double payments for a few months while your current house is for sale
and in escrow. Once that house is gone, then you have one payment, and some
extra cash flow that you can use for improvements -- landscaping and such.
When you get your house all worked into shape in a year or so, you will have
gained equity that will take your Loan To Value from somewhere in the range
of 80% down to 50% or 60% -- depending on market conditions in your area.
You don't need any of the cash out of the house, just a simple rate-and-term
refinance.
On a No Doc, the loan officer fills in your name on the form and sends it
in. It's much simpler than the Full Doc loan that most people get. To be
sure, the No Doc might come with a bit more interest, but as I outlined
above, you're gonna refi out of it in a year or so, so the interest isn't a
big deal, and it is required to avoid some other discomfort that you don't
want to deal with. While the No Doc has some short-term costs (higher
interest rate by a fraction of a percent), it also has huge benefits to your
personal situation.
| |
|
| Jeff Strickland wrote:
> I don't understand your aversion to a No Doc Loan. It sounds to me like
> the
> perfect solution for you. Get a 5/1 Interest Only with no prepayment
> penalty. This gives you a 5-year fixed rate interest only loan that
> should
> be more than managable even with your other mortgage. Once you move in,
> you
> make double payments for a few months while your current house is for
> sale
> and in escrow. Once that house is gone, then you have one payment, and
> some
> extra cash flow that you can use for improvements -- landscaping and
> such.
> When you get your house all worked into shape in a year or so, you will
> have
> gained equity that will take your Loan To Value from somewhere in the
> range
> of 80% down to 50% or 60% -- depending on market conditions in your
> area.
> You don't need any of the cash out of the house, just a simple
> rate-and-term
> refinance.
> On a No Doc, the loan officer fills in your name on the form and sends
> it
> in. It's much simpler than the Full Doc loan that most people get. To
> be
> sure, the No Doc might come with a bit more interest, but as I outlined
> above, you're gonna refi out of it in a year or so, so the interest
> isn't a
> big deal, and it is required to avoid some other discomfort that you
> don't
> want to deal with. While the No Doc has some short-term costs (higher
> interest rate by a fraction of a percent), it also has huge benefits to
> your
> personal situation.
Hi Jeff,
I am actually not opposing a no-doc mortgage, just trying to look around
to see if there is anything else that could be applicable to my situation.
Interesting enough, discussing this matter with you and other good people
in this group actually made me postpone the whole process till next
spring. I feel like it will be much better having more cash available so I
can deal with any extra costs and maybe even improve my credit score
couple notches.
Thanks again for your answers.
Cheers!
D.
-------------------------------------
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| |
| Grover C. McCoury III 2005-11-19, 11:21 am |
| "DA" <rcdd_at_teledatasystems_dot_com@foo.com> wrote in message
news:43739428$1_3@alt.athenanews.com...
> Let me re-phrase that: you are saying that no-doc mortgage IS NOT an
> option for me because the first mortgage will, obviously, show in my
> credit report. Is that correct?
You still have to describe all real estate owned on the loan app. Therefore,
you must state what type of home is associated with your *current*
mortgage(s) on the loan app - primary, secondary or investment property.
> Also, this has been mentioned couple times here, but what is considered a
> good credit score in relation to no-doc mortgage application? I mean, it
> can go all the way up to mid 800s. Is 800+ what gets considered?
Typically, to qualify for a "no-doc" or "no income/no asset" loan you need
at least a 700 (possibly high 600's) credit mid-score.
|
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