Well, it's been a VERY scary week, so a very long post is in order.
A portion of my downpayment is gift money (not even the majority of it.) The loan program I was approved for required 5% down, and the loan officer (phone intake?) at Chase Home Finance plugged all of the info in, and I was approved on Jan 18th.
I received loan commitment last week, Feb. 20th.
Then, on the 22nd, the closing lawyer heard some rumbling that I hadn't met all of the loan conditions yet. I immediately called the loan processor, left a voicemail, and no return phone call! My wife and I sweated over the weekend.
On Monday of this week, I got ahold of the loan processor, and she said in that scary, distanced, unemotional voice, "the loan program you were approved for requires all of the 5% down payment to be your own money."
She claimed I had enough of my own money at one point, but that the checking account fluctuations left me with not enough of my own money (I am still confused, as this was never the case.) I tried to argue that they knew the source of funds the whole time (she verified my assets, after all!) but she cut me off.
So she said the words that nearly killed me. "I am rescinding the loan commitment, and will talk with underwriting tonight to see if they can fit you into a 100% loan that won't have gift money conditions. I will call you back sometime tonight with their decision."
I've got a 618 credit score, two chargeoffs in the past year (after all my cleanup) and many lates, the most recent being about 8 months ago. I wasn't hopeful.
6pm... 7pm... 10pm!!!
Arghhh!!!
My wife and I didn't get a call, and didn't sleep a wink.
I called and got her voicemail in the AM, called again an hour later, and she answered. "The senior underwriter wasn't able to look at it last night, but we are scheduled for a face to face meeting in an hour, to see if we can put something together for you."
So about 20 minutes after that time, my phone rang with an odd number, and when I answered, I heard "I have good news Mr. Sxxxxxxxxx! The senior underwriter has approved you for 100% financing and you can still close on Friday."
She was calling from her cell phone right outside his office; she didn't want me to wait another minute to hear. The only remaining fears for me were the terms. She said the loan officer would call me with the points/buydown options.
The loan officer called me last night at 6pm, and I was ready to hear something obscene. In the end, here is what changed:
We were going to pay 5% down, 1.25 points, 7%, 30 year, with Fannie Mae/Freddie Mac streamlining available after 1 year.
Now, we are going to pay 0% down, 1.75 points, 7.5%, 30 year, Fannie Mae Flex100, I believe, and we can still streamline after 1 year.
We could have bought down 1/4% per point, but we chose to stay with the 1.75 points.
The difference in payment is $140 per month, but we have to bring about $10,000 LESS to closing. (From around $17K to around $7K, including escrows, lawyer, all fees, etc.)
We will be using $2K from that savings to pay off two credit cards that have fixed payments, saving us $200 per month, which buffers our increase in the monthly mortgage payment, and frees up another $60 per month to accelerate paying down some of our other credit debt (under $6K, total.) The rest stays in the bank unless it can do work for us; we aren't blowing it on silliness.
In 1 year, with a year of mortgage payments, no more baddies on my credit report, and the remaining flaws long in the past, my credit score will be much, MUCH better, and we will be able to streamline to a more competitive rate for the long haul.
All in all, independent of the potential heartache, real drama, and near disaster, I think this deal will work better for us than the original one!
The loan officer said getting a 100% loan with a 618 seemed pretty rare to him, and he mentioned many of the 100% programs are looking to set a minimum 700 mid-score in the near future. Buyers be forewarned!
Good luck to others, and I'll post once I have the keys in hand!
Starting Score: 469