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Posted by Phil & Joanne on January 6, 2006, 11:29 am
Please log in for more thread options Thank you very much for this information. It is/will be very helpful and
greatly appreciated.
Joanne
> It might, but they will be processed as a non occupant co-borrower. And
> the broker will only use them for income qualification, not credit
> worthiness.
>
> Here's what the banks look at -- will we have to take possession of the
> property? The bank does not want the property, they want the money. If
> they have to take the property and sell it to get the money, they have
> costs they would rather not have. They want the assurance YOU will pay the
> note off and they won't have to take your house away again. They have risk
> associated with giving you money because you have already given one house
> back, so the ban is going to charge you a higher rate because you bring
> greater risk to the table. The co-borrower does not mitigate the risk,
> they only bring more money to the table.
>
> The non occupant co borrower COULD get the loan, if they have enough
> income to support two mortgages. If your house is more than about 70 miles
> from theirs, they could take a Second Home mortgage and avoid the
> Investment Property loan charges. Then, you keep detailed records of
> actually making the payments for two years -- YOUR cancelled checks MADE
> ON TIME -- will be required. After two years, you and the co-borrower go
> to the bank and refinance the loan, you show that you have actually been
> making the payments all along, not the co-borrowers, and you should be
> able to get the house transferred to your name. The problem with this
> strategy is that your credit will not be rebuilt during this time because
> the co-borrower will have the Note in their name, so you will have to work
> on all of the other aspects of your credit and get them cleaned up. If you
> go to the bank in two years and say, "look, I've been making the payments
> here," but your credit card history is in the crapper, you'll have the
> same problems getting a good rate that you're having today.
>
> Here's what I suggest,
> Try to arrange an Interest Only 3/1 ARM. This means you want a 3-year
> fixed rate interest only note that becomes adjustable in the 4th year. The
> Interest Only quality of the note will give you the lowest possible
> Qualification Payment -- the payment they measure against your income.
> After 2.5 years of making each and every payment on time, approach the
> bank for a refinance to a normal 30-year mortgage. Frankly, I wouldn't
> even get a 30 if I didn't plan on retiring in the house and having it paid
> off some day. If you will be selling the house anyway, take out a loan
> that approximates the duration of your staying there. I think that taking
> a loan in 5-year increments makes sense IF the housing prices in your area
> are rising. The rsik exposure to you in this scenario is that housing
> prices actually fall, and when you are faced with selling or refinancing,
> you could owe more on the home than it is worth, and you would have to
> come up with the shortfall out of your own pocket. Most of us live in a
> steady-to-rising housing market, so the worst case is that you do not gain
> any equity, but it is rare that anybody loses equity -- but it happens and
> is a very real possibility with a 100% loan. If the housing market rises,
> then your house is worth more at some point in the future, and the equity
> value can help you.
>
> Let's say you are buying today for $200,000, and the values are rising at
> 5% per year for each of the next 5 years. After this period your house is
> worth $255,250. The EQUITY of $55,000 is roughly 25%, and is closer to 30%
> assuming you have made principle payments during that time. So, the next
> loan will be for $200,000 minus any principle paydowns. If the new value
> is $255k, and you take a loan for 190k, then 190k/255k = 75%. This means
> that your new loan is 75% of the value of the property. The banks like
> this because it assures them that you won't walk away from the house and
> forfiet all of the equity. When you are buying the house with a 100% loan,
> there is nothing there to keep you attached to the property other than
> your emotional attachment. But when you have equity built up, you now have
> a financial hook in the property that reduces the risk to the bank, and
> this will get you a lower rate. Get it?
>
> Sorry for top posting so much information.
>
>
>
>
>> Thank you for the info. Will it help at all if we have a cosigner that
>> has really great credit?
>>
>>
>>> There are lots of them. The Rate won't be very attractive, so you will
>>> need to be making some pretty good money to qualify for the payments.
>>>
>>> Call a Mortgage Broker in your area. Indeed, call a few of them and
>>> compare the fees. It won't be pretty, but you can get a mortgage.
>>>
>>>
>>>
>>>
>>>> Does anyone know of a mortgage company that will lend 100% if you have
>>>> a foreclosure less than a year out?
>>>>
>>>> Thank you,
>>>>
>>>> Joanne
>>>> bluwater1@direcway.com
>>>>
>>>
>>
>>
>
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