Mortgage question

[motion]

Originally posted by Nathans_Dad
Ok, I'll look into that, thanks.

Would having a HELOC adversely affect my ability to qualify for the same amount on the new mortgage?

This sounds like it will lower your FICO score. If you have plenty of pad over 720, you're probably fine. If you are on the edge, you may want to think hard about this option.

[Steve Carlton]

Originally posted by on2wheels52
Query what is "80/15/5 or 80/10/10"?

Obviously housing market conditions vary, but were I the seller I would tend to turn down contigency sales offers. Our last move we purchased before listing the 'old' property but no doubt not the normal way of doing things.
Jim

The first number is the LTV (loan to value, or percentage of the loan to the selling price) of the 1st loan, the second number is the LTV of the 2nd loan, and the third number is the down payment percentage. An 80/15/5 has a 95% CLTV (combined loan to value). I don't think the best rate 1st loans allow a CLTV over 90%.

Nathans_Dad should check with his real estate agent to see if a contingent offer hurts his chances of getting into contract. It appears he wouldn't be making offers until his old house is in contract, which makes for a stronger contingent offer.

My understanding is multiple credit checks for the same purpose (such as a mortgage loan) within a 45 day time frame count as one inquiry. So getting a HELOC right now probably wouldn't affect his score. However, HELOCs tend to report on credit reports as secured revolving credit lines, so it could hurt his score. It might be safer to get a fixed rate 2nd on his current house, as a fixed rate loan might be less damaging to his FICO score.

If Nathans_Dad has a FICO of 700+, he can state his income and assets and still get full doc pricing. If his stated income is reasonable for his employment, he can guarantee qualifying. If he legitimately qualifies for one or both houses on his verifiable income, his FICO can be a lot lower.

Another solution would be to borrow enough money from family to qualify for 10% down + closing costs + 3-6 months reserves. This should be done so that the two most recent bank statements don't show the deposit of the loan, which makes it appear to be "seasoned" assets.

There's a lot of unanswered questions, so it's really hard to map out a strategy. Without knowing all the facts, much of the advice here could crash and burn. Nathans_Dad should talk to a loan officer at a large lender with many products in the state he's buying in, such as WaMu, Countrywide, or a reputable mortgage broker.

[Harold_89_911]

I went though this about a year ago. Similar to what others suggested. Took a HELOC out on the old house and used that as the 20% down for the next plus other escrow costs. Then secured one of these fancy interest only loans with a 1.75% teaser rate for 3 months based on stated income to finance the remainder 80% of the new house. Then when the old house sold, it paid off my old loan, HELOC, and I used the rest to reduce my new loan. Then finally re-financed the new house into a more normal loan.

Worked with a good mortgage broker on this and could not have done it without him. Even got me the HELOC without early payment penalty.

Hope this helps, Good luck!

[therotman]

Originally posted by Nathans_Dad
Ok, I'll look into that, thanks.

Would having a HELOC adversely affect my ability to qualify for the same amount on the new mortgage?

Yes, is your debt to income ratio is high you would qualify for a lesser loan amount, but there is no way around this unless you sell your current house first. Most people are not borrowing near their maximum so most likely you would be fine.

While applying for a Heloc on the current house would not negatively effect your credit score actually having the HELOC for such a short period of time would most likely effect it negatively.

The best advise is to ask around a few good lenders and stay away from brokers who want anywhere near 1.5 points. As previouslty mentioned Wamu & Countrywide would be good places to start. Ask them if your credit score is barely enough to qualify for a particular interest rate or if your debt to income is not high enough to get a HELOC on the current house and still qualify for the loan on the new house before you start any other loan process.

[therotman]

Originally posted by Porsche-O-Phile
(Semi-related) question - why on earth do lenders insist on making this so difficult on people? Why can't some smart lender just figure, "hey, we'll give people what they actually want and can use - a 40+ year FIXED-RATE mortgage with 100% financing, no closing cost B.S. and none of this making people pay exorbitant sums monthly for a 25 or 30-year fixed or making them constantly have to live in fear, lose sleep and worry over rates with an ARM or I.O."

There are 40 and even 50 year loans out there. Big lenders even offer them you just have to ask. It does not save you very much each month off of your payment however over a 30 year loan so they are not very popular.

[Nathans_Dad]

My scores were 705, 760 and 798. Not sure what is up with the 705...

[Steve Carlton]

Each score should have the top four factors listed why the score wasn't higher. Maybe there's something affecting your 705 that didn't show up on the others.

[Dantilla]

I used a bridge loan a few years ago, but I sure didn't pay the stupid fees they are asking of you. It was pretty painless.