topic Re: Should we shift to apply for conventional and dump the preapproved FHA loan in Mortgage Loans

Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Mon, 04 Jan 2010 00:17:21 GMT

Hello, I was hoping for feedback from "neutral" parties about this matter. I'm a FTHB.

Here's my current loan scenario:
Preapproved by Wells Fargo for $196000 FHA loan about 3 weeks ago. I gave them info about my job as being a contractor for the same place (government agency) I had worked formerly as a full time for a lilttle bit more than 2 years until Aug 2009 (e.g. I started working as a contract doctor/physician for them again beginning Nov 23, 2009 up to now). Started looking for homes this past 2 weeks and broker/realtor has been giving me talk that forclosures here in Vegas tend to lean towards granting cash buyers and conventional loans as priorities before FHA loans. I understand this in a way on the business side of matters though it is a disheartening thing to know of.

This, of course, leads me to think about applying for a less than 20% down conventional loan (have been looking up to $220,000 list price home here in Vegas and think we can do up to 10% downpayment on it).

Here are a couple of important numbers:
Credit scores pulled by Wells Fargo show: EQ Beacon 5.0 772, EX FICO II 785, TU FICO Classic 98 764
Loans I have: $6100+.00 Credit Union loan paid $399 a month fixed rate (expected to end in 15-16 months). Other loan is a $350.00 Amexco credit card. Own a car paid in full. Rent paid $1498/month
Savings money: $49000 (and continues to grow of course, even when renting). There is already money put aside to pay for IRS taxes this tax period that is separate from this savings amount.
Weekly amount earned (gross paycheck) varies, depending on how I want to go to work (lazy factor included, being a physician is a stressful job btw): From $2600+/week (no money earned due to holiday or furlough day where I work at so no control over these) to $4400+/week (standard 5 day work week). Again, these are gross amounts (no taxes deducted on paycheck).

So basically am hoping for consideration for conventional loan (less than 20% down, prefer 10%) based on above talk with realtor and ealing with forclosures since do not desire short sales at this time. Any input on which direction to proceed on this manner greatly appreciated......Happy New Year as well

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Mon, 04 Jan 2010 03:38:25 GMT

It wouldn't hurt much to have your loan officer run both. Your scores are set for the best rates and 10% should be enough. Then you can compare and make the decision when you find your house. Good luck!

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Mon, 04 Jan 2010 05:49:55 GMT

thank you

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Wed, 06 Jan 2010 20:23:26 GMT

Hi--I just wanted to ask, does preapproval amounts vary by state? When you mention 196K, is that what you wanted o be approved for--or is that the max you were approved for? Based on your salary, I think you would be approved for a lot more. We are in CA so maybe the preapproval amounts are higher because homes can be expensive here?

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Wed, 06 Jan 2010 20:41:08 GMT

I wouldn't know abuot states varying preapproval rates. I asked only for 190,000 for a home price purchase because that was what I was only willing to pay for a home (and you are correct I can afford much more but I'm pretty frugal/practical The loan officer just added a few thousand from thereon without me asking him to do so.......by the way haven't really heard from him again after asking for a conventional loan at 10%

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Wed, 06 Jan 2010 23:14:26 GMT

@Anonymous wrote:
Hi--I just wanted to ask, does preapproval amounts vary by state?

FHA loan limits vary by area. This website can tell you your county's limit - FHA Loan Limits

Message Edited by rmily on 01-06-2010 05:14 PM

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Wed, 06 Jan 2010 23:46:24 GMT

Oh okay, that makes sense. I was thinking the the original poster makes substantial more than me and my husband, but I see that we were pre-approved to the FHA max in our area so that may explain it. I remember they raised the FHA limits in our area and I was angry that they did so--homes would be a lot cheaper if only the FHA limits were lower here in my opinion. They raised them over 200K in northern California I believe -- I keep hoping they will go down and make things more affordable.

Message Edited by Homebuyer24 on 01-06-2010 03:46 PM

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Fri, 08 Jan 2010 00:35:34 GMT

As an update: Talked with US Bank, Wells Fargo, and one credit union in the last 3 days. Basically no one wants to loan since I'm a 1099 employee less than 2 years (underwriting rules they say). Giving up on this mortgage loan application business for now, life goes on.....

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Jazzzy — Sat, 09 Jan 2010 20:58:21 GMT

@Anonymous wrote:
As an update: Talked with US Bank, Wells Fargo, and one credit union in the last 3 days. Basically no one wants to loan since I'm a 1099 employee less than 2 years (underwriting rules they say). Giving up on this mortgage loan application business for now, life goes on.....

How did you get preapproved? If you explained your situation to them before you started the process, which apparently you did, what did they have to say?

I used to be a real estate broker, and I always told people that things like this happened for a reason. Time, after time, after time, I saw things turn out for the best on down the line. Hang in there. It will happen when you're ready.

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Sat, 09 Jan 2010 21:15:14 GMT

I dont know why they preapproved me in retrospect. I'm waiting for a reply from US Bank loan agent who said she'll look into any "portfolio" they have (I think she was talking about 5/1 ARM at 5.25% but wanted to talk to someone first).

Thank you for your kind words. If I don't hear from anyone about a mortgage, we'll just keep on saving money (or maybe get that BMW X6 and drop my Honda Pilot

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Mon, 11 Jan 2010 23:25:40 GMT

That sure doesn't sound very "frugal or practical"!!

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Tue, 12 Jan 2010 02:59:11 GMT

they pre-approved you probably because all they did was enter your credit info and income in. They often do not do stuff such as the employment stuff. In many cases, the pre-approval that you talked to is just a data entry person just entering info into a computer program and they get a yes or no. Then if they get a yes for a pre-approval in the internal system, they will send you to a real loan officer. This is how alot of large banks do it. This is also how some people get caught up and end up denied for something that a real loan officer would have caught, or at least cautioned on initially.

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Tue, 12 Jan 2010 06:06:30 GMT

heeeheee...so true for not being frugal or practical. that is a fantasy for me to buy that nice car btw; i own two cars and both are paid off/bought off in cash

here's an interesting development: received an email from US Bank loan officer i've been communicating with for the past 1.5 weeks, she promised to get back to me about a "portfolio loan"

She emails back saying that she talked with management who say that per me and loan officer's discussion they don't have a problem on this portfoilo loan which is a 5/1 ARM. Here's other details about it per the email--> fixed for 5 years equally monthly payments on a 30 year amortization, index is 1 year treasury bill. First payment adjustment occurs 61st payment, no prepayment penalties. The rate today (Jan 11, 2010) is 5.75% with a 0.625 origination fee. Somewhere in the email she tells me that should I be employed for 2 years or more (self employed) she can refinance me into a 30 year fixed program "if that is what you like"

I've talked with 4 other banks and credit unions today via phone, none else would give me a loan citing the underwriting thingy on employment length (one person did say contact them in 6 months and advised me not to put in a lot of deductiosn on taxes).

We've given it some thought before on how long we would keep the 1st home we would buy; basically by buying low priced (about $150ish thousand dollar home) and somewhat small sized (3 bedroom, some sense of a backyard) we'd stay in it for about 7 years max we believe then we would move on. We expect to save money about 40ish thousand per year too (whether we rent or own but the latter calcuation was based on fixed rate mortgage). We'd like to get input on whether we should bite on this offer by US Bank, any advise and specifics would be greatly greatly appreciated

Message Edited by rjsf on 01-11-2010 10:06 PM

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Tue, 12 Jan 2010 06:16:34 GMT

be careful on variable rate loan or arms. property values are still stagnant or down in most areas and if unemployment dips any more and once all the buyers credits go away, there will liely be further downward pressure on the home market. The real issue is that unless you are wanting to loose money, you may very well not be able to sell in 5 years and still clear realtors fees/etc as well as recover any of your down payment. On top of that, rates are likely to be much higher than they are right now. Lastly, 5.75 with .625 points paid down is about a half to 3/4 point higher than FHA rates right now without the points.

So, anyone buying right now on a variable rate needs to keep in mind that they may very well be both loosing money if the house further deteriorates in value, as well as setting themselves up for issues as rates and lending standards go up. this means you may not be able to refi anytime soon, and when you do it may not be at a good rate/terms.

Personally, If i were buying right now (and I did buy last year), I would not buy a house that was not on a fixed loan (for all we know inflation could kic in and rates could be back up to 8-10% in 2 years), nor would I buy a house unless I could stay in it indefinitely if necessary. I would not buy a small house now with the thought that I would need to upgrade anytime soon.

To each their own though. good luck.

Re: Should we shift to apply for conventional and dump the preapproved FHA loan

Anonymous — Tue, 12 Jan 2010 08:28:46 GMT

thank you, great advise and along the lines of what i have been thinking.