Am I getting jerked around?

[ckostecki]

1st time home buyer here. I've been saving for a house when I heard about a 1st time home buyers program her in IL.

I can get a $15k grant from the state forgiven after 5 years and a $35k from a company at 4% interest. Then I have to come up with the rest with a conventional mortgage at a fixed rate. Mid score is OK so I know I can get a good rate but the rules have been changing on the conventional mortgage.

When I started in Feb (yeah it's been that long) it was $1,000 down min, easy enough. Now fast forward to end of April with the banks going downhill, now they want 3% down and an additional 5% is the house is in a declining area. OK a bit of a stretch but doable. 2 weeks later it is now 5% down and 5% for declining area.

I know they want some equity in the place so they don't loose any $$ but every time I go to make an offer on a house I get these kind of roadblocks thrown at me. Has anyone else been facing and of these issues? Also the loan office has been constantly pushing an FHA loan. If I go this route I would have to drop my purchase price to something unreasonable for the additional requirements for the loan.

Should I go looking for a new bank?

[DallasLoanGuy]

in defense of all the good loan officers out there.....

it is not uncommon to get a counteroffer  from the lender because some market was 'just added' to the declining list.

however, it sounds like this loan officer has had more issues than this.

[ckostecki]

I did not intend to bad mouth all loan officer, just wondering if I had a bad one. I have been shopping the same market for months now.

Not sure what you mean about a counter offer from the lender. On the initial call when I say I want a pre-approval for X amount with so much I am putting in earnest and I can cover the required down payment. She tells me I can't use the program because things have changed.

what other issues would the loan officer have?

[DallasLoanGuy]

Counteroffer from lender would be when we send in a loan at 97% and then they counteroffer an approval at 5% + 5% for declining.

now they are saying your loan program is gone?

you might want to get a backup offer from another lnder.

[ckostecki]

The original loan program still exists, just the conventional mortgage portion requirements keep changing. As far as i know she has never submitted an anything stating what property I am looking at.

[JuliaTN]

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ckostecki wrote:

Also the loan office has been constantly pushing an FHA loan. If I go this route I would have to drop my purchase price to something unreasonable for the additional requirements for the loan.

Should I go looking for a new bank?

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FHA is becoming the go-to product for lots of lenders. I read an article recently that said (if I remember correctly) that FHA has accounted for about 3% of loans in the last 10 years, it is expected to be more like 30-50% by the end of 2009. FHA has had a bad rep with sellers because they were requiring so many repairs and paperwork. At least around here, that has changed significantly.

Keep an open mind.

[ckostecki]

I can believe it considering how much harder it is getting a conventional mortgage. I guess this question goes more toward Dallas. I just got off the phone w/ the loan officer. She said June 1st there is going to be a major change in approval's. Higher credit scores, more down, and a higher DTI. Any word on what the numbers may be than?

[DallasLoanGuy]

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ckostecki wrote:
I can believe it considering how much harder it is getting a conventional mortgage. I guess this question goes more toward Dallas. I just got off the phone w/ the loan officer. She said June 1st there is going to be a major change in approval's. Higher credit scores, more down, and a higher DTI. Any word on what the numbers may be than?

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Sounds like a hard sell closing tactic....

but maybe they know something i dont.

fannie is relaxing the 5% ltv reduction for declining markets.... maybe that is what they are talking about?

[Anonymous]

Here's how this works....

You need 3% as your minimum investment for an FHA loan. You need to do the FHA because they'll ignore the declining markets. And, no, Fannie is not letting up in IL- IL hasn't hit bottom yet.

Your 1st Mtg is going to be the FHA. Kinda icky to go this way because you'll wind up paying monthly mortgage insurance for at least 5 years, depending on LTV, but you're still getting a free $15K out of it.

Your second mortgage is going to be the $35K @ 4%.

The State will hold a third lien for the $15K grant, and will discharge their interest once you've hit the 5 year mark.

FHA will let you do this as long as you don't go over their loan-to-value requirements. AND, if you need help with the 3%, ask your Loan Officer about a down payment assistance program.

Lastly, just have him check to see if the Rural Development eligible.... the last true no down payment out there....

Good Luck!

[ckostecki]

mortgagechick, so you are saying I can get the FHA and still use the 1st time home buyers program that has th $15k grant and $35k loan (depening on the ltv)? I wish I can get a loan through you. The 3% is no issue, I almost have 5%.