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 Serious Snap Trapper
Posts: 4275
  
Location: In The Snow, AZ | What does it take to get pre-approved for a home loan these days?
We are planning to set up a meeting with a financial advisor or something rather soon. But I wanted to get your guys' opinions.
My husband and I have been married for 4 years. I am a stay at home mama. He is a delivery contractor. Annual income is approx. $85k to $100k. Credit scores for both of us are in the upper 600's..... not the greatest, but were still working on cleaning it up and paying off some stuff. We don't have a lot of debt. Credit cards have all been paid off aside from one, that will be paid off by March. Other then that, we have one truck payment that will be paid off by the end of this year. We would be first time home buyers. And the house we are renting is the one we would like to purchase. Purchase price is $200K.I thought that with first time home buyers incentives and such that we would be eligable for a home loan. Turns out we are not approvable.
Would love some thoughts, about anything really. I'm just kind of disappointed. I really thought it was going to happen this time. Very discouraged. |
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 Too Many Irons in the Fire
Posts: 1724
 
Location: Augusta, KS | Takes a down payment |
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 Banjo and Baby
Posts: 7259
Location: South of Canada and North of Mexico | Look into a credit union. We are "buying" this spring after it not working out this fall due to not having enough saved and time constraints as we are getting a modular and being that we are ordering it and tying it into our land it would be a construction loan which is 80/20 and it has to be for the appraised value after the house is set. But they were VERY helpful and I would think a credit union would be the place for you to go to vs a bank... |
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 Off the Wall Wacky
Posts: 2981
Location: Louisiana | I'll give this a bump since my SO and I are hoping to purchase a home this year. We have not begun the process yet and are both clueless. We both have good credit and he has a nice income. I am still in school and have some student loans but nothing huge. We have a place in our sights, a friend just bought more land and is selling their old place. It is perfect for us with a house, barn, arena, and decent amount of land. I just don't know where to start... |
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Too Many Irons in the Fire
Posts: 1724
Location: Augusta, KS | Wanted to add, when I was 18 I was pre-approved for up to 100k, making less than 20k a year. At a 3.75% rate. Because I have 15k to put down. I also had about a 690 credit score, and was single, with no outstanding loans at the time.
Banks still make horrible decisions (who in their right mind would loan me that much, with so little income?? I made $1200 a month roughly, my escrow payment would have been $800 or so a month!)
They just want money down. |
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Married to a Louie Lover
Posts: 3303
| Do you have a down payment?
If you do and it's enough (it varies by state what you need in a down payment for a conventional mortgage) then I would say credit scores.
How long has your hubby been at his job?
I'm surprised they didn't tell you why you weren't able to qualify.
I make less than your hubby and I qualified for a similar priced house with 5% down on my own. My credit score is better, and I know they're being pickier about that these days so that's my thought. Can he try on his own?
Edited by OhMax 2014-01-06 1:21 PM
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 Elite Veteran
Posts: 1119
| If you don't have a down payment, look into an fha loan. And do everything you can to get your credit up! |
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Married to a Louie Lover
Posts: 3303
| MissouriJen - 2014-01-06 2:16 PM
If you don't have a down payment, look into an fha loan. And do everything you can to get your credit up!
I know at least in Michigan and perhaps federally they've changed the way FHA loans work. You have to carry Pmi insurance on them for the life of the loan, not just until you have 20% in equity among other things that can make them much more expensive in the long run.
Another thing is to look into having the sellers pay your pmi upfront as a closing cost. That saved me the same amount of money every month that the sellers coming down $20k in price would have - great deal. |
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  That's White "Man" to You
Posts: 5515
| Clean up your credit report! Payoff any collections and judgements, catch up any past dues. There are so many options that dont require a down payment or at least only require a minimal down payment. Credit union over a bank in nonsense, they both sell to the same loan purchasers who have the same purchase criteria. |
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Serious Snap Trapper
Posts: 4275
Location: In The Snow, AZ | We were initially told that being first time home buyers, we will not need a down payment. With that said, we do have $10k to put down at this point.Granted, if they want 10% we don't have enough either way right now. I'm considering selling our horse trailer to make up for the difference. But we don't show a "paper trail" as they call it, on the $10k. So until we put it into an account and have a "trail" for a minimum of 2 months, it is basically non-existant to the bank anyways.
Hubby has been doing his job for 8+ years now. He is considered a small business who subcontracts out with a large company. Not sure if that makes a difference.
Another thing I guess I dont understand is that since we are married, why don't they consider that? I was told my credit is strong enough, but since I don't show the income, They can't approve just me. Hubbys credit score was a few points below what was needed, but he shows the income. So they can't approve just him.
Forgive me if I sound ignorant.... but I am. And I would like to be educated.
I appreciate all advice given and will look into and exhaust what efforts I can. |
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 The Original Cyber Bartender
Location: Washington | Since the housing market tanked and the banks and people lost their shorts getting into homes they had no business in buying or better yet being approved, it is really hard out there.
WE refinanced our home and it was painful. VERY painful. AND we had over 65% ownership in our home.
Work on those credit scores, and start saving for a down. Have you been by any chance been dealing with a private owner on the rent? Or a bank? Might talk to them about the rent to own options. |
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Serious Snap Trapper
Posts: 4275
Location: In The Snow, AZ | fatchance - 2014-01-06 11:48 AM Since the housing market tanked and the banks and people lost their shorts getting into homes they had no business in buying or better yet being approved, it is really hard out there.
WE refinanced our home and it was painful. VERY painful. AND we had over 65% ownership in our home.
Work on those credit scores, and start saving for a down. Have you been by any chance been dealing with a private owner on the rent? Or a bank? Might talk to them about the rent to own options.
We rent from the owner. And he is willing to do the rent to own, but is hesitant still. We were hoping to just buy it and save everyone the hassle. We were also told that doing a rent to own through the owner could be a bad deal. And the example we were given is (heaven forbid) the guy dies, and the wife decides to sell the home outright rather then the previous arrangement. I, myself, thought it sounded absurd. I would think that any legalities would have to be worked out when a contract for the rent to own was signed. If something like that were to happen, there would still be a contract, right? Maybe that's me being naive though. |
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The Original Cyber Bartender
Location: Washington | Still go through a title company for a closing date so you would have a contract. I would read the contract first and if you had issues I would take it to a lawyer to read. These guys that own the home usually don't own it right out, so they will charge you a higher interest rate than let's say a bank would. Ask the question and see what he says. |
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That's White "Man" to You
Posts: 5515
| fatchance - 2014-01-06 1:58 PM Still go through a title company for a closing date so you would have a contract. I would read the contract first and if you had issues I would take it to a lawyer to read. These guys that own the home usually don't own it right out, so they will charge you a higher interest rate than let's say a bank would. Ask the question and see what he says.
Agreed! |
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 Expert
Posts: 1295
Location: Chehalis, Washington | Im in washington so may be different.
You need proof of income.
You need money in savings(for us it was a min of $2000 needed).
Credit score of 620 minimum. Higher the better obviously.
We did FHA. with 3.5% down(but our down payment was paid thorugh government program)
Pre Approval was the easiest part of purchasing our home! |
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 Ima Fickle Fan
Posts: 3547
Location: Texas | Since you have the $10K for a down payment, I would put that in the bank to establish a paper trail. However, since you may raise flags on how it was acquired, you may want to space out the deposits. That would be something to also ask the financial adviser.
Pull your credit report and look for any errors that you can easily clear up.
While you are doing all of this, maybe talk to the owner and see if while you are working on getting the loan that a portion of your rent can be knocked of the asking price. This lets him know you are serious and doing what you can, but also helps you in decreasing the loan amount. And it eliminates the owner-finance risk. If he's agreeable, make sure to get that in writing though.
A bank won't approve you as a stay-at-home mom, regardless of your better credit score, because you can't show any income. So while your credit score may be better, in the bank's eyes, you have no way of repaying the loan.
Another thing that may be hurting you is your borrowing history. My in-laws have run into this a bunch. They've always done an owner-finance and paid off early, which is great for them, but doesn't leave an official paper trail for the bank. So based upon their borrowing history with banks, they aren't a super safe risk. It's crazy. Hubby is in trailer sales and also sees this quite a bit when trying to finance people on a LQ. If they haven't borrowed and paid on enough stuff in the past, it's harder to get them financed.
My last advice is to try a loan officer who has access to multiple banks and will try harder for you. I have a friend in Wickenburg who is a loan officer and can PM you her contact info if you want.
Good luck and don't give up. Getting financed is a LOT harder than it used to be. |
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 Elite Veteran
Posts: 928
Location: Northern CA | Just beware that the requirements for FHA loans are quite heavy. Not necessarily for the buyer but for the home itself. it has to pass several inspections and apprasails. We almost did not get our home because there was one 4 x 6 panel on the back side of the house that was not painted! Ridiculous, some sellers are not willing to sell to buyers going through FHA because the requirements and repairs lie on their shoulders. |
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 Dr. Ebay
Posts: 8507
Location: Land Of Oz | If you go the contract route, definitely go through a lawyer. No need to each have your own just one to do the contract up so it's binding. You'll have to have title insurance as the title will have to be researched. That and the lawyer fees will probably come out of your pocket. I'd also have a bank act as an escrow agent. (they hold the title until it's paid off and you make payments to the bank). This will ensure you ownership once it's paid and the owner recourse if you default.
Edited by Jinx 2014-01-06 2:59 PM
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Expert
Posts: 1295
Location: Chehalis, Washington | ~BINGO~ - 2014-01-06 12:42 PM We were initially told that being first time home buyers, we will not need a down payment. With that said, we do have $10k to put down at this point.Granted, if they want 10% we don't have enough either way right now. I'm considering selling our horse trailer to make up for the difference. But we don't show a "paper trail" as they call it, on the $10k. So until we put it into an account and have a "trail" for a minimum of 2 months, it is basically non-existant to the bank anyways.
Hubby has been doing his job for 8+ years now. He is considered a small business who subcontracts out with a large company. Not sure if that makes a difference.
Another thing I guess I dont understand is that since we are married, why don't they consider that? I was told my credit is strong enough, but since I don't show the income, They can't approve just me. Hubbys credit score was a few points below what was needed, but he shows the income. So they can't approve just him.
Forgive me if I sound ignorant.... but I am. And I would like to be educated.
I appreciate all advice given and will look into and exhaust what efforts I can.
Its because you need income yourself to be able to use your credit score. Otherwise they bank could care less. They need to know you can repay the loan. You can still be ON the loan, but just in name, to show ownership.
Talk to the loan officer they have neat programs to plug in all your info and they can tell you what to pay off, or to pay down and how it will effect your hubbys score. We raised our scores drasticly in just two months time to give us a good enough score for our loans.
Its tough getting a loan now adays. But it is possible, with lots of headaches. Just make sure to give them all the information they ask for ASAP. Our lenders office loved us as the second they asked for something I would scramble to get it to them. They wished every client was the same! I was just estatic they were helping us buy our home! |
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Expert
Posts: 1295
Location: Chehalis, Washington | ALSO. Do not make any new purchases, or doing anything crazy financily at the moment until your loan is signed closed and you have keys in hand! (even though you live in the home). Only do what your lender says. |
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Veteran
Posts: 159
Location: Central TX | Im in TX. When I bought my place with my husband 4 years ago it was 400k. We had to put a 20% down payment down 80,000 to buy the home. We were in the same situation you are in. Things may have changed a little bit but Im not sure. |
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Location: Philly | brrlrcrtx44 - 2014-01-06 3:30 PM
Im in TX. When I bought my place with my husband 4 years ago it was 400k. We had to put a 20% down payment down 80,000 to buy the home. We were in the same situation you are in. Things may have changed a little bit but Im not sure.
all situations are different...there are a ton of "programs" out there that allow the buyer to reduce the amount they have to put down. Like some have said, 3.5% through govt programs and i know someone who is having to only put 1% down even though they have owned several houses in the past, but have recently been renting. since they rented for x amount of time, they are now considered a 1st time home buyer. think there may be several different first time home buyer programs out there - do as much research as possible and go from there. the buyers that are going from their current home (that they own) to a new one are usually the cases where a larger % is required to be put down. |
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 Dr. Ruth
Posts: 9891
Location: Blissfully happy Giants fan!!! | hhmmm, something doesn't sound right. Not only have I been through the process of home buying, I have an office right next to our rural home loan program director.
First question, where is the $10k actually coming from? Not being able to create a paper trail is my first question raising red flags.
Second, lenders have generally become slighly more lax when it comes to credit scores, but some variables are weird. If your hubby is a sub-contractor then that means he is getting a 1099. Self employed technically. That is probably more where your hang up is coming from. Lending to those who are self employed or are receiving a 1099 gets more complicated.
Last, the major banks are still requiring 20% down. There are A LOT of programs that are not! You need to shop around.
It isn't as hard to get a loan as some may think. Really, you just need to know that all paperwork under the sun is going to be required. And you will need it for years back too. If you are in the mindset that you will need to furnish more paperwork than you care to think about and you realize it is going to feel like a serious invasion of privacy, it isn't that bad.
I was a first time home buyer 2 years ago. My credit score was way less than my hubby's (not so much anymore), but I made more. he actually ended up quitting his job due to a death in the family before we closed our loan. Our down payment was coming from one place and I transferred it into another account. PROVING the transfer was ridiculous but I knew it was going to happen. I had EVERY SINGLE paper document I could think of ready to go when we started. Two full years of MONTHLY bank statements, 401k, insurance, etc ready to go. 2 full years of paycheck stubs and all W-2's. . 3 years of tax returns on us. Any loan that ever occurred in three years. Employment verifications and any changes of addresses every occurred in over 5 years. Anything and everything I could think of that would apply to
And I was working on year 4 and 5 while they were working on those three just in case.
ANyways, that is my take and questions. Hope that helps! |
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