Buyer's Beware....Times a Changing!

I got a call yesterday from a client who was purchasing a $300,000 house. She was putting down $250,000 as a down payment. Yes....$250,000!!!!!! Wow! She needed a loan of only $50,000. I told her what the rate was and the costs were. She told me that she was referred to me by her parents and a prior client of mine.

HER STORY GET'S WIERD......

As she was only borrowing $50,000 and has perfect credit and good reserves one would ask:

What's seems to be the problem?

It appears that she went to a local bank...in fact, it's a very reputable bank, but they told her that they wouldn't be able to close her for 60 days! 60 FRIGGIN days on a $50,000 dollar, incredibly low LTV mortgage.

With further discovery it appears that there are two major issues. The first is that the bank doesn't have the capacity to support quick turn times (30 days is not quick) on even purchase transactions. Wow!!!

THE SECOND AND MOST DISTURBING ISSUE is because of HVCC. Obviously, this is an outrageous bill that takes the power away from lenders in ordering and/or controlling the appraisal process. The bank couldn't guarantee that the appraisal would be completed in such a timely manner. Huh?

A WORD FOR HOMEBUYERS WHO ARE LOOKING RIGHT NOW?????

1) See what sort of control the mortgage company has taken in ordering an appraisal. Some companies order through national appraisal serach firms. Others order in their corporate offices. Generally speaking, the more that the lender has control, the better.

2) Get your application in asap. You don't know how long an appraiser will take to get an appraisal done. If there are issues, the appraisal may have to be re-ordered. Leave time for mistakes. This law stinks, but until it's overturned, we're stuck with dealing with it.

3) When writing a contract, give enough time for a conventional appraisal if you're going to get a conventional loan. Talk to me, your loan officer, your realtor or someone to advise you on turn times within your local market. Reverse engineer your contract so that you don't blow your contingency dates.

4) Consider FHA. In the case of this client, FHA clearly isn't the answer, but it may be for you. Just because you're not putting down 3.5%, that doesn't mean that FHA may not be the perfect loan for you. Ask your lender...

Until this law is overturned, we're all stuck with it. In the meantime, make sure that you're prepared. All you can do is control what you know. You can't worry about what others do, but you can prep for the mistakes of others as well as the problems that our government creates.