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Non-arm's length (Buying a house from my in-law)Hello CB family, Long time not posting hoping y'all doing great. My mother in-law is selling one of her houses in Southern California and she asked me if someone I know might be interested and I thought It might be a good investment option to buy her house and rent it out. So assuming this idea is good enough how should I proceed? do we both go thru the same Loan Officer, Lender, Realtor, etc.. The house price based on Zillow/Redfin/Realtor/Opendoor is averaging $440K and I have my own house already that I pay mortgage on it. I appreciate your input everyone.
Why you should shop around for a mortgage?
FunnyDonut posted a topic in MortgagesShort Answer: It saves you a lot of money According to a recent research from Freddie Mac, the average borrower could save $1,500 just by getting one extra rate quote when applying for their mortgage. With five quotes, they could save $3,000 or more. Wow, so I should really do it. But how exactly should I do mortgage shopping? Preparation: Estimate your mortgage rate There is an old Chinese saying from The Art of War that “If you know your enemies and know yourself, you will not be imperiled in a hundred battles.” That’s exactly why this step matters. Having a rough idea of what interest rate you can expect is crucial for you to play well in this game. There are many factors that determined your interest rates including base rate (update daily), loan amount, location, LTV (loan to value ratio), credit score, house type (single family vs condo) etc. So to help yourself estimate, you can talk to your friends who have done mortgage recently and ask about their rates and how they get them. There are also some anonymous mortgage reporting site (such as rate.exposed) to get more data point. Keep in mind the best way to estimate your rates is comparing with people with similar cases. Now, let’s pick up the phone and start dialing You can follow the steps here: Call 5 lenders, ask them to quote and write the numbers down Find the best quote from the 5 lenders, let’s call it lender A Call the rest 4 lenders again asking them to match (or even beat) the quote from lender A. If you get a quote better than lender A, go back to step 2 and step 3 to call the rest to match Until the number can’t go lower and the rate is within your expectation. Extra Tip 1: Ask for special program Different lenders have different promotional program. For example, Wells Fargo has relationship discount where for every $250k asset you move to WF bank account, you get your rate reduced by 0.125%. You might just save yourself $10k but just a simple ask Extra Tip 2: Credit Hard Pull Many people are worried about hurting the credit scores by having too many lenders hard pull your credits. In fact, if you do them within a short period of time, multiple credit inquiries will combine to count as only one. Also, if you know your credit score in advance, you can simply just ask them not to pull and tell the lender the number. That should be more than enough for lenders to come up with a quote for you. Extra Tip 3: Pay attention to fees Some lenders do the trick to lower your interest by increasing some less obvious fees including closing costs, points, etc. So whenever you get a mortgage quote, always look at the full picture before making any decision.
Advice Needed ... Loan Closing Options and PMIHi Folks - I'm scheduled to close on a new construction home 8/30. The kids start school here in MD on 9/3. They enroll in new schools and I want to get them settled as much as possible. That background might come in handy for the scenario that I'm seeking advice on. Here's the scenario: purchase price is $439,540. I'm currently doing an FHA loan with 3.5% down. My mortgage credit score is 726. The loan estimate has me paying $300 month in PMI. The issue is that in October I get my yearly sales bonus; at that time I can put down the ~$90K needed to cover the 20% down payment to remove PMI. Questions for those experienced in the industry: 1. Should / can I delay closing for two months? If so should I go conventional? 2. Should I move forward with the FHA loan and refinance quickly? How soon can one refinance? 3. Should I move forward with the FHA loan and simply pay $90K on the principal of the loan and reduce the amount to have PMI removed? Thanks for your help in advance.
is a reverse mortgage the answer?
luckydriver posted a topic in Mortgagesfriend is disabled , has 2 kids and lives with mom. home is definitely worth 200K, probably more. next door sold for 260 last month. i'm unsure exactly what kind of loan for 120K they have on the house now but friend tells me it's in moms name only. and they only have to pay the interest and none of the principal so thats what they've done because they have no extra money. taxes are not escrowed. i dont know more about the financing (interest/terms etc) but i know they do not have the income to support what they need to do with the kids and daily expenses and need money from somewhere. ideally they wanted to have friend refi into her name so home is in her name only since her mom is old, but friend just has 1800 a month income. if my math is right a 30 year mortgage would be 600ish P/I. i know is a silly question but is it ok to sell your house to your daughter for less than market value then get the cash out? i cant see why not. and while i dont think they would demand escrow for the taxes, they would want to make sure her income supports it and obviously it does not. tax and insurance is at least 400 a month. which is well over 50% on the back end. so assuming my math is right above and daughter cannot buy the house herself. we are left with mom and daughter together. i believe moms SS is 1200 a month. so they have 3000. i'm pretty sure that supports paying the 120K mortgage mathematically but they need extra cash too. from all ive read reverse mortgage is very expensive to get and its a last resort but thats where they are. at a last resort. but then i read from a source that you have to be 62 so that would disqualify the daughter from being on the mortgage. so it seems like we are back to square one if thats true. i know this is incomplete data but based on discussion so far any suggestions on types of loans they could get on the house? --------- i didnt want to complicate the issue but its also in the will that the other daughter gets half of of the value of the pre addition of the house. a few years ago before the house had a 2nd floor put on, an appraisal was done. and that value is in the will and the other kid gets half that value upon death. so it's a mess.
QM changes are around the corner
road2freedom posted a topic in MortgagesHere's an updated article discussing the impacts of mortgage credit availability with conventional loans: http://finance.yahoo.com/news/mortgage-credit-declines-ahead-qualified-154412865.html Some important points Expect conventional loan DTI requirements to drop to 43% for most borrowers Those wishing to exceed 43% will be looking at 70% LTV or less Points and fee caps of 3% (is this including rate buy downs and LPMI too??) I believe the conforming limits are expected to be lowered too January 1st but I haven't been able to find a specific amount yet. This all seems counterproductive considering where the market is headed, so hold on tight. It's going to be a bumpy ride.
Interesting note from LO - DTI and PMI for Conventional
road2freedom posted a topic in MortgagesI know we've discussed DTI quite a bit, the norms and the exceptions, but I'm not sure if this was discussed previously... The LO mentioned that DTI could exceed 45% but that <=45% was required in order for them to obtain PMI on the loan. This was for conventional with <20% down, obviously.