Home Financing

Home Financing questions and answers

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Q: How does home owner financing work?
Hi, I am intend to sell my home and have about $70-$90,000 in equity. I want to finance 10%. How does it work? I ask one of my realtors. he told me that I must have the 10% in cash or get a equity credit line and give that money to the lenders at the settlement. After settlement, I can use the money paid by buyer to pay for credit line to prevent interest. It sounds weird to me. What are step I must do in home for sale by owner and and owner financing? Hi, I am intend to sell my home and have about $70-$90,000 in equity. I want to finance 10%. How does it work? I ask one of my realtors. he told me that I must have the 10% in cash or get a equity credit line and give that money to the lenders at the settlement. After settlement, I can use the money paid by buyer to pay for credit line to prevent interest. It sounds weird to me. Let say I have a house for sale $400,000. I owed 306,000 mortgage. That I would have $94,000 equity. I have a buyer who willput down 10% and ask for 10% financed by owner. So at settlement, I should have $20,000 in cash a and promising note from buyer to pay me $40,000 in 30 years. Is this right? I don't have cash and other credit line. What are step I must do in home for sale by owner and with owner financing?

A: Lets say your house sells for 300K(and has a 220K mortgage). Lets say your buyer has 30K for a downpayment. They get a loan for 240K and get the second loan from you for 30K. The 270K from the buyer is first applied to your mortgage and you would get 50K in cash at closing. You should have a lawyer draw up and help you with recording the mortgage. The lender for the buyer needs to know the details of your arrangement.

Q: Why would a sell that is not financing a home purchase as to see your credit report?
I am looking into buying a foreclosed home that is owned by a bank. We have already submitted the offer with the lender letter showing that we have financing. Now the bank that owns the home is asking for time to review our credit instead of just accepting the offer. Why would this happen? Oops, I mean seller at the top there... Uh, sorry about the bad spelling, I mean Why would a *seller* that is not financing a home purchase *ask* to see your credit report?

A: First of all is it a foreclosure or an REO? A foreclosure would be where there is an auction that takes place and the winning bid pays the amount that won plus foreclosing costs,any tax liens,mechanic's liens, etc and does not have a clear title. An REO is real estate owned or bank owned and has a clear title. Was the lender letter a pre-qualify letter or pre-approved letter? There is a difference. A pre-qualify is when a buyer submits basic information and can progress from there. A pre-approved letter involves the basic information but also includes bank statements,employment verification and so on. The bank has got to make sure that your credit report doesn't show any negatives so that down the road the possibility of a foreclosure would not happen again. Also the guidelines change daily and more information may be needed to guarantee the loan. When two banks are involved they have different guidelines they go by so one bank is asking for more in the way of the credit report to secure the transaction

Q: Does anyone know about Combo Home Financing?
We just had chat with Sales rep. and she offered us Combo Home Financing as we were unable to pay huge monthly Mortgage and tax. I was wondering if this is a good option? If not which one is better?

A: If your loan is over $417,000 it may or may not be beneficial to split it ino two loans. With the new conforming loan limit increase it makes jumbo loans slightly more attractive, but a combo loan may be able to save you money. Ask a mortgage professional to show you the difference between the two.

Q: Can you get home financing regardless of credit score?
Can you get 100% home financing in houston (480k)...with a low credit score..but proof of funds? We are thinking of moving there because houses are super super cheap.the house we are looking at in houston, here..would sell for quadruple the price.,. well how much percentage would we have to pay? here for a 500 k house we need 20 which is 100,000 but thats in miami

A: About 1 year ago I would have told you yes. But in todays market no. In order to qualify for a 100% financing loan you should have 3 months reserves in the bank, 680+ credit score, a debt to income ratio under 48% and documentable income and employment history.

Q: How can I recover my earnest money deposit on a newly constructed home if I am declined for financing?
My wife and I signed a contract to purchase a new home in August of 2005. Since then, our finances have suffered because of unexpected medical expenses and a prolonged illness in the family, requiring our assistance. While the new home has been constructed like we dreamed, we have been declined for financing because of our debt ratios and because we could not come up with the down payment because my spouse has been helping her parents extensively and unable to earn a steady income. The construction company has given us two weeks to come up with financing, or forfeit our earnest money, approximately $34,000. I've worked with several different companies and all have declined our financing. The home was constructed in VA. After re-reviewing my contract, I did not find any financing contingency in there that would refund my deposit if my financing was declined ... it appears that the builder has insured that they could keep the deposit under all circumstances. Do I have any remedy?

A: that is usually a no-brainer clause in a real estate contract, that and if the home doesn't pass inspection (high repair costs). Your agent should have included that in the contract when submitting your offer. The problem is if it is a new development, often they have their own agents doing the sales, so they probably aren't including any nice back door clauses like that. But, your house has probably appreciated in value since your offer, so the builder might be happy to get out of the contract, too, so they can sell it for more. --------------------------------------------------- Okay, this is a longshot, but contact www.naca.com they are a non-profit housing advocacy group. they really aren't geared for people in your situation, but they hate real estate bloodsuckers and they might be able to strong arm this builder or recommend a decent attorney, or stage a picket in front of this development. NACA got their money from a predatory lending settlement against Fleet bank and now they do their own loans. Good luck, $34,000 is a lot to lose...

Q: Any advantages in financing for a new home over a pre-owned home, which are the same prices?
I found a developer selling brand new homes in an established neighborhood. They are selling them same price as the older ones, ranging 5-30 years old, in the same area. After reading a post at http://answers.yahoo.com/question/index;_ylt=AnCTDl921NDZap6jeNpdklFIzKIX;_ylv=3?qid=20060615121924AAiC2jX, I think new home might be the choice. However, is there any advantages in financing for new homes?

A: Yes there are advantages in some cases. The buyer may have incentives on new homes that you will not get on older homes. For example. I was looking at an older home and had put in an offer on it--the deal fell apat becasue the seller would not fix some things that were discovered in the inspection. Anyway-bottom line is that I kept looking and over the weekend found a new home that is is $22,390 MORE than the 1st BUT because I can get a better interest rate it is a minimal amount more (monthly) than the 1st home. The homebuilder had a "summer sale" and I was able to get an interest rate of 5.375% if I put 3% down. (Which I had planned to do anyway) I would not have gotton a rate anywhere near that had I gone with a "used" house-I had been quoted 6.25 appx. 1 month ago and they have gone up since then! Some new builders will throw in appliances, sprinkler systems, pay your closing (or a portion of them) so from my personal experience YES there can be advantages of purchasing new in addition to cheaper insurance. Good Luck!

Q: Where can you get financing for a log home?
We were all ready to build our dream home when we found out that our bank won't finance a "log" home. This is our local bank where we do all our banking/financial matters. They said something I don't understand about companies they go through won't finance such construction. What's the difference in stick built and log built? OK, that is two questions! Our builder is Amish. He is the best in the area, so I'm sure there is no financing with him... Thanks to the first lengthy answer, very helpful!

A: Log homes are "unique properties" when it comes to getting a mortgage. Many lenders - especially in today's tightened lending environment - will no longer do loans on unique properties. But most large lenders are still doing these loans under certain parameters. It appears your bank has a correspondent lending relationship with larger lenders. The larger lenders are less likely to do these loans through the correspondent channels, but more likely to do these loans through their own direct, retail channels. Your appraisal will need to show that there is a market for this type of unique property in your area. This means at least three other log homes sold in the area in the past year. However, it appears you are looking for construction financing. This is going to be more difficult. Since there is a glut of new homes on the market, lenders are being much more careful lending for construction. Contact the large, major lenders. (SunTrust, Chase, CitiMortgage, BoA, et al). Ask what the present guidelines are for getting a loan on a unique property. These lenders are more likely to be doing these loans in house.

Q: How to choose the right home financing?


A: The first thing to do is to educate yourself as to what products are out there. Determine which products you feel most comfortable with and those with which you would not feel comfortable. Determine your budget, what can you afford monthly. Determine the areas that you would like to be in so that you can determine the total cost including taxes and insurance. Then talk to your bank and two mortgage brokers. Get good faith estimates from each and compare the total cost of the loan, the interest rates and the payment. The cost of a loan is basically divided into two parts. The origination cost (including discount points if any) and the cost of credit (the rate). One obviously can impact the other as with discount points. Compare the total cost of each loan and do not be confused by having costs shifted back and forth between origination and rate. Some lenders also try to disguise other fees in the loan. For instance Lender X will advertise a "No Fee" loan but the rate will generally be 1/8 point higher. That is fine as long as you know that is what you are paying for the "no fee." Good luck, I hope this helps.

Q: What is your opinion on owner financing my mobiel home?
I have a singlewide 2yr old mobiel home for sale. If the buyers cant get a aloan should I offer to owner finance it for them? Is this too big a risk? Will the debt still show on my credit?

A: I did this before and it was a big headache. It's just like renting - tenants can be unreliable. And yes, it still shows up on your credit, including late payments.

Q: As a first time home buyer, what do I need to know about home inspection, financing and pitfalls?
I am interested in obtaining information about getting inspections (do I need one?) and in particular what pitfalls I need to be aware of when negotiating the deal so that I can optimize my return.

A: make sure you save money and keep your bills up :)

Q: First time home buyer financing question?
Ok I'm new at all this financing stuff. I am wanting to purchase my first home. What is the process on getting a loan? How long does the process take? How do I go about getting the best interest rate? I dont want to put down a large down payment what mortgage would be best? Can you explain how points work? I have excellent credit and am debt free. The type of home I plan on purchasing is a fixer-upper and I plan to live there at most 3 years and then I will either sale it or rent it out. I know this is too many questions but the mortgage process gets overwhelming and I dont want to get shafted in the loan process.

A: If you have a checking acct, the bank where you currently bank. Ask to speak to a loan officer. It is best to be pre-qualified before you make an offer on a house. If you pre-qualify, you fill out all the paper work for a loan and the bank will let you know how much of a loan you can get and the terms (interest, etc.). It takes 14-30 days usually to process a loan...depending on how prepared you are...you should have the last two years tax returns, a couple of months of pay stubs, and get your credit report on your own (you can get it for free). Points are the loan fees the bank charges to process the loan...some loans have zero points, so it pays to shop around. The points are not usually tax-deductible, but some of the other fees are, so check how things are itemized. You can also go to a mortgage broker...the broker will take your application and shop it around to four or five different lending establishments. The broker will get you the best deal possible and will get paid a commission based on you closing the loan. A broker can be a good way to go for a first time buyer.

Q: Who are the best lenders out there right now regarding re-financing a home mortgage?
I am currently with Citimortgage and I'm thinking about re-financing my condo.They do charge a one-time non-refundable processing fee of $635.00.Is that a decent price or are there better deals out there and what lenders don't charge a closing fee (if any)? Any recommendations?

A: always be careful of no closing cost loans! or very low closing cost loans! the better question is what rate are they charging you! processing fees are charged to all loans! All banks charge fees the question is what will you be charged! banks do not have to show you yieldspread! this is money the bank makes for charging you a higher rate. all banks and most brokers charge a average of 3% in fees most companies split this up between up front fees and what is refered yieldspread. you could find rates now as low as 5.50% depending on your credit scores! find a lender that will find you a great rate and a low APR ! Good luck!