The reason no one will work with you is probably because you want such a small loan that the amount of work required by the broker isn't reflected in the commission they'll earn
Not true. She's in a LCOL. If that was the case, no one in that city would be financing a home purchase because a ton of homes there are $125K. We bought a $90K condo there a few years ago & had no trouble finding a broker who wanted to work with us.
Kwynn - I hate to say it, but you're going to have to face the facts: your income is not super-high and you're self-employed. That's high-risk for a broker. I'd just pay cash for a house and be done with it.
It's probably irrelevant, but why do you have to pay a year of rent up front?
Some landlords, if each person on the lease doesn't meet the income requirements (4x the monthly rent on your paystub/tax returns), you can't rent the apartment. So you need to pay upfront.
I've actually seen this here on MM too---it's just that the landlord needs to know he or she will get his or her money when the income is too low (I don't have traditional paystubs--just my checks I write myself each month).
The reason no one will work with you is probably because you want such a small loan that the amount of work required by the broker isn't reflected in the commission they'll earn
LOL seriously? That may be a small mortgage to you, but it's a lot of money to a lot of people. My mortgage was only for 145k and I was never treated like I wasn't worth their time... quite the contrary. It's not like she's trying to borrow 5k, she's trying to borrow a reasonable percentage of the price of the home.
I had a client try to get a small mortgage to refinance before when I was practicing and it was next to impossible. He finally just ended up paying it off with cash. The rates were awful compared to what they would have been if we was mortgaging 80% of the property value instead of 20% and my mortgage broker friend basically said it was going to be impossible because of the low $$ value (it was about 70K).
You may also be able to get a better deal if you do ultimately decide to pay in cash, as it may make it a more attractive offer to a seller because they won't have to deal with lender issues or financing falling through.
I have heard this and find it very attractive. I love getting a good deal---I am considering this for this reason alone.
I think this is an excellent point. We put in an offer on a house once and despite having a nearly identical offer to the accepted one (ours may have been slightly higher even, I can't remember), the homeowners chose the all cash offer since they were highly motivated to get out fast (one spouse had already moved for another job) and they apparently didn't want to have to deal with the time and hassle of our financing contingency (even though my husband was in a great position in terms of credit, income and assets as a prospective borrower). If your agent can get you any kind of intel on the sellers, you might be able to better gauge their motivation and how receptive they would be to a deal (googling the sellers might help with this too).
If your all cash offer can get your sellers to knock a bit off the price, there is a percentage of your money "back" right there...
We bought five years ago and I had a unique situation in that I didn't have a credit score but had great income and assets for what I was buying. The first few places blew me off. Previously I had tried to got a credit card and they also denied men for not having a credit score. Anyway, we used a broker who was willing to work with me to qualify me. I had to get letters from previous places I worked and utility companies. I know thing have gotten tighter, but I understand your frustration and encourage you to try local brokers.
The reason no one will work with you is probably because you want such a small loan that the amount of work required by the broker isn't reflected in the commission they'll earn
In a LCOL area, people purchase and refi homes in this price range everyday. Hell, the average cost of a home in my area is $150K so, assuming a 20% downpayment, that's a mortgage of $120,000.
Our mortgage was only for $116K when we bought our home and $108K when we refinanced a few years later. We never once had an issue with this.
The OP's problem is obviously that she's self-employed and her business isn't bringing in much income yet. Not that she only wants to take out a small mortgage.
Kwynn, I'm sorry that this has been such a difficult process. I agree with the others who suggested just buying a home in cash.
Post by sporklemotion on Jan 18, 2013 6:21:22 GMT -5
I'm not an expert, but when I went to finance my current home, I was told that they don't really consider mutual funds/investments and the possibility of roommates/tenants to be guarantees (my husband and I were buying a place together but have kept our previous condos as rental properties), so we were told that we might not qualify. We did qualify, but the lenders were initially concerned that our mortgage would eat up too much of our incomes, and they didn't find our savings (less than yours but enough to cover the cost of our house) to be reassuring. Our broker said that it was because the value of a mutual fund can change so drastically that it's not guaranteed money. It seems odd, because 500K isn't going to drop to zero, but he said they generally don't factor it in much at all. Similarly, tenants or roommates aren't guaranteed, so if you need that to cover the mortgage, they think it's too risky. Our condos are in high rental areas, so we weren't worried about it, but our broker said it probably wouldn't help. I could be wrong about this, because it was just the explanation our broker gave, but that's what we were told. I agree with PP that paying cash is probably the way to go, especially if you think your home will keep or increase in value. It doesn't sound like it would come close to depleting your savings, and you won't have to worry about a mortgage payment. The rent from your future roommate can help you build up savings down the road or help you fill in other expenses.