NEED Any LO Advise. Please

[haapril]

Okay I am going to make the story straight to the point. I found a co-signer for me. That has good credit and and the income was okay enough to bring in the extra 1,000 income for me to get approved. I am purchasing home #2. And the The LO said that ratio are high at 56/56 with both income and debt. Ok , now here is the part I am not to sure about. He said that I need to bring 15% to the table for FHA which is about 32,000 and 15,000 to close. The Loan is fixed at 5.125 30 year and it is a FHA Loan. He told me with FHA they accept high ratios, but the down payment would be more. Is that true, I always thought that FHA is 3.5%??? The home previously brought 521K and now 214K supper deal for 6/4 build in 2007 in Miami. I was wondering what would be the longest that banks would give me to close because I don't have all the money yet need extra 25K  closing date 9/30/09 I was thinking like 10/30 or 11/15. I started to think that this is to much money to put down. Any one has any experience with this?? Is My LO trying to rip me off with so much cash I nned to bring to table???? Thank you all for time and advice.  

[Anonymous]

the down payment requirements are differnet on a 2nd home purchase I believe.  Also, they may need you to put down that much to get your DTI down to the point it is at now.  If it is at 56 now I am amazed you are getting approved.  There is no way you would get in on a higher DTI than that.  My guess is they worked out what that max DTI the UW would clear and then based the number on that.

As far as closing, You might get a 60 day close, but a buyer is going to be weary of waiting that long unless you have some guarantee that the money will be there.  Expect them to want a sizeable earnest money deposit for that condition and then be prepared to loose that deposit if you fail to come up with the money. 

Also, if you laready have an accepted offer, there should already be a final date to close clause.  It is not up to the your lender to decide how long to wait for close, but the seller.  You would have to send in an addendum to the contract requesing a closing date extension and you would need an exact date when you are sure you will have all the funds available.  Be prepared for this to be negotiated.  Waiting a month or two extra costs the seller additional costs and they will expect you to cover them and often pay a daily fee.  this will be especially true if they had other offers that they could go back to if you can't follow through right now.

[rockymtngrl]

I agree with Mickie, you can ask your LO how long your approval is good for but the real question is how long is the seller willing to wait. Asking the seller to wait 2 more months because you don't have the cash to close probably won't go over to well.

[ShanetheMortgageMan]

mickie is right, when it's considered a "2nd home", 85% LTV just may be the maximum financing.

SECONDARY RESIDENCES. A secondary residence is a property the borrower occupies in addition to his or her principal residence. Secondary residences are only permitted when the appropriate Home Ownership Center (HOC) agrees that an undue hardship exists, meaning that affordable rental housing that meets the needs of the family is not available for lease in the area or within reasonable commuting distance to work, and the maximum loan amount is 85 percent of the lesser of the appraised value or sales price. Direct Endorsement (DE) lenders are not authorized to grant hardship exceptions. Any request for a hardship exception must be submitted by the lender in writing to the appropriate HOC. HOC jurisdictions are listed in Appendix I. A borrower may have only one secondary residence at any time. All the following conditions must be met for secondary residences:

A. The secondary residence must not be a vacation home or otherwise used primarily for recreational purposes; and

B. The borrower must obtain the secondary residence because of seasonal employment, employment relocation, or other circumstances not related to recreational use of the residence; and

C. There must be a demonstrated lack of affordable rental housing meeting the needs of the borrower in the area or within a reasonable commuting distance of the borrower's employment. Documentation to support this must include:

1. A satisfactory explanation from the borrower of the need for a secondary residence and the lack of available rental housing in the area that meets the need.

2. Written evidence from local real estate professionals who verify a lack of acceptable rental housing in the area.

Is the co-signer related?  If not, then that is why they are requiring 25% down (not 15%).

B. Non-Occupying Borrowers. When there are two or more borrowers, but one or more will not occupy the property as a principal residence, the maximum mortgage is limited to a 75 percent LTV. However, maximum financing, as described in paragraph 1-7, is available for borrowers related by blood, marriage or law (spouses, parent-child, siblings, stepchildren, aunts-uncles/nieces-nephews, etc.), or for unrelated individuals that can document evidence of a family-type, longstanding, and substantial relationship not arising out of the loan transaction. All borrowers, regardless of occupancy status, must sign the security instrument and mortgage note. If a parent is selling to a child, the parent cannot be the co-borrower with the child on the new mortgage unless the loan-to-value is 75 percent or less.

To reduce risk exposure, mortgages with non-occupying co-borrowers are limited to one-unit properties if the LTV will exceed 75 percent. While we do not object to legitimate transactions in which non-occupant borrowers assist in the financing of the property–such as when parents help their children buy a first home–this arrangement may not be used by non-occupant borrowers to develop a portfolio of rental properties. The degree of financial contribution by the non-occupant borrower, and the number of properties similarly owned, may indicate that an investor loan has become the practical reality and that, in effect, family members are acting as "strawbuyers." FHA does not impose additional underwriting criteria on such transactions, such as specific qualifying ratios the occupying-borrower must meet individually. Lenders must judge each transaction on its merits.  

[DallasLoanGuy]

How exactly is the loan officer ripping you off?  It's not like they are going to pocket the money....

 Likely, the down payment is because he couldn't push the dti any higher.

 Also...were you the one asking about doing a short sell on your current residence?

Maybe this is because you are upside down on the other home? I don't have time to look it up. But I thought you had to pay down the old home to get another one. This is to prevent you from getting a new home and letting the old one go back to the bank.

This isn't a 2nd home is it? You mean that you already have one and are trying to buy another one for primary residence? Is the old one fha? why the move? new job in new city?

Shane? 

[haapril]

Hey dallas. I dilemma is that I want to purchase a second home because the 1st me and my family has out grown. I have a 7.5% intrest rate fixed 30 and never late. I was having problem purchaseing the second home because even though I have the income to cover both mortages, I only worked at my second job for 6 mos. and the UW wanted at least 1 year. I had spoke with a LO that said that I should do a short  sale to get ridd of by first home and that i won't effect my vcredit if I don't stop making the payments, I did not know how true that was. I have never been late with my moratage payment since my purchase 4 years ago. I really would love keep my 1st house to use as a rental, but it was making it so hard for me to make a purchase. my aunt will co-sign with me and in 6-9 mos I plan to refinace to take her off the title.

[Anonymous]

Just to clarify, a short sale will destory your credit.  It will have almost the smae affect as a foreclosure.  Ont op of that, it often leads your credit cards (if you have any) to cut your limit, close your card, or jack your interest rate (which can lead to more problems and lower FICO scores).  LO's tell people this because it takes a couple months for the hit to your score to make it onto your report some times so they dont particularly see it on your report if you buy at the same time you short sale.  All they want to do is get you to buy.  a month or two down the road, the score tanks.  It can also have a very strong effect on your ability to get a home loan for quite some time.

[ShanetheMortgageMan]

The "refinancing later part to remove her from title" in 6-9 months, when your 2nd job income still wouldn't be old enough to qualify, might be difficult unless you can sell the original home.  Plus, with values still declining (you being in Florida it's more of an issue), you might not have the equity in 6-9 months to refinance her off the mortgage either without paying down a significant amount on the loan and/or pay the closing costs out of pocket (which usually aren't that cheap in Florida, particularly since you'd have to also pay a quit claim tax).