Mortgage approval process-PLEASE HELP!!!!!

[noorjahan]

We just decided to buy a Condo and looked online. We saw one and then I called the real estate broker Foxtons. Anyway, they set up a viewing date, and right away they transferred me to their Mortgage dept for a pre-approval. They have this deal with Citibank, which means I would get my mortgage from Citi. Now, it happened so quick, I gave all the info and all that. Couple of days ago we got papers by mail, application for loan and stuff and it says we are approved (probably means pre-approved).

Now, the interest rate is just insane 7.% something, closing cost is huge too....and the loan is for ony $100,000.00!!! I am not sure what to do, and still we haven't seen the apt.

I have NO IDEA about the home-condo buying process!!!! Can someone please help me with some suggestion. What is the process to get mortgage? Even though we are pre approved at Citi can we still look for other mortage in other banks or something? By any chance anyone here has any experiecne with Foxotns? Century 21?

Any suggestion would be greatly appreciated!

Thanks

Noorjahan

[Holiztic]

Noorjahan--

It sounds like your real estate broker's office has a relationship with Citibank (which means they get kick-backs for sending them business). There is really nothing bad about this AS LONG AS YOU also talk to another mortgage company or 2 so that you can compare rates and programs. This way you know if you are getting a good deal.

Tell me this-- are you getting some kind of money back at settlement or some other bonus for using Citibank? This can sometimes be a reason to go with their mortgage co. IF they are competetive with another.

I would start with your bank or credit union and see what they can offer, then compare that with what Citibank says.

7% is a little high right now but could have to do with your credit scores (if they are marginal--if you don;t have a copy of EACH of your credit reports w/score, you should get them for you to see). Do you know what the loan program is? 30 year fixed? 5 year Adjustable Rate (ARM)? Is it interest only? If you are ABSOLUTELY SURE you will sell it within 5 years, a 5/1 ARM will save you a little money, but if there is ANY CHANCE that you will own it (even renting it out) longer than 5 years, go with a 30 year fixed (or 15 if you can afford the higher monthly payment).

As far as the 100K, that is not going to get you a condo in Manhattan (obviously you know this!) The amount you are qualified for is generally based on your combined incomes (unless you only ASK to be qualified for 100k) But 100k would usually be your max loan if you (and DH together) make about $30,000/ year. It sounds like there may be some other reason they qualified you for such a low amount.

I would call Citi and ask them about the loan amount first, and find out a little more about the loan program (questions above). And then DEFINITELY go meet (in person if you can) with someone at your bank or somewhere else you trust and see what they can offer. You can check out current loan programs and interest rates--even pre-qulaify-- online at places like e-loan, but it helps to meet with someone in person if you don;t know anything about the process. You can always talk to someone at the bank and then go with one of the online or 1-800 lenders for a better deal.

Share whatever you find out, I'd be happy to give more advice! (I am not a mortgage broker but work in the field and work WITH mortgage brokers everyday!) Also bought our condo 1.5 years ago and went through all of this!

Good luck!

[Shiloh]

We just decided to buy a Condo and looked online. We saw one and then I called the real estate broker Foxtons. Anyway, they set up a viewing date, and right away they transferred me to their Mortgage dept for a pre-approval.

Big red flags their mortgage dealer?
They will get a kickback for that one, get your own broker.

Look in yellow pages or ask friends or go to your own bank for mortgage broker. They have a deal which might mean everyone gets the same rate, but they will approve more clients... Everything is negotiable, call them up what rate do you think is good? 5% make you happy call them up tell them what you want to pay in closing costs and what you want as an interest percentage and tell them if they can't match what your (imaginary) broker has offered you will giver you business to him but go see one anyhow.

Go to your bank 100,000 might not have to be a traditional mortgage, you could take a loan or even line of credit (only have to pay interest its open flexible etc)

[~Shanna~]

I agree with pp - I'd be just a teeny bit suspicious that they hooked you up with a lender before you really knew what was going on. A search on the internet and perhaps with a broker will help you determine if 7% is the best rate for you - also, you can shop around for different title companies, appraisers, etc. to determine the cheapest rates and best quality.

I found that there were so many places in the home-buying process where the folks we were dealing with would just sort of refer us or send us on to a company that they were in a relationship with, and made us feel like it was a done-deal and we didn't have any choice. You'll probably be much happier if you're aggressive about doing your own research and having control over the costs.

Good luck sweetie! It's a wild ride, but usually worth it in the end

[phathui5]

We have bad credit and we just got a mortgage loan for $5.87%

Pre-approval doesn't mean you're committed to anything, keep shopping around.

[cking]

Hi Noorjahan,
I will write more on this subject later, but I wanted to say a few things quickly:
I agree with everyone else on the lender - definitely look around. It sounds like you have just gotten a pre-approval so far, which is definitely not binding, so don't worry about that (but they may keep bothering you). We got ours through Commerce, and I highly recommend them...they were great to work with, very low rate, and VERY low fees. I know there are a bunch in Manhattan now!

And on finding a realtor-
It sounds like you did what we did - saw a place we liked and called the realtor representing that seller. Well, it happens that we got lucky doing this and got a great realtor (not the original house). But apparently the way you are supposed to do it is to interview and select a realtor first. Ours gave us the whole speach about how they don't recommend using the same realtor to represent the buyer and seller, and it made sense to me after that.

[Nemmer]

Yep, sounds like you've gotten good advice here. I work in the mortgage business -- processing mortgage loans. It is very common these days for Realtors to have preferred mortgage lenders, and some even have partnerships, where they give bonuses to each other for referrals. It sounds like you've been preapproved, so I agree -- call them and find out the specifics. Ask what type of loan it is (fixed or adjustable) and what term -- 15 year or 30 year. They should be able to tell you what your credit scores are if they've already pulled your credit report (which they almost certainly have if they've preapproved you). Ask what the closing costs would be, and request a GFE (Good Faith Estimate). You can use that estimate to compare with other lenders you interview. Definitely check out a few lenders -- there are a million out there, so it is hard to choose. But go with someone you feel good about and who has competitive rates/fees.

It also sounds like you haven't even made an offer on this condo? You might also want to shop around for a Realtor who will look for the type of home you are looking for and show several properties to you.

Good luck -- it can be a very stressful process. We just bought a home after spending 6 months looking. But it is worth it in the end.

[noorjahan]

Thanks ladies for your responses!!!

Originally Posted by Holiztic

Tell me this-- are you getting some kind of money back at settlement or some other bonus for using Citibank? This can sometimes be a reason to go with their mortgage co. IF they are competetive with another.

I have no idea. I don't even know even there is something like getting money back at settlement. Please tell me about it, what's that??? Is that a program or something?

And, yep, the cost of the condo is $100,000.00!!!!! And also you guessed it right lol- it's ABSOLUTELY not in Manhattan! It's in the Bronx, and I know not a lot of people want to go there- but we don't mind~also, there is a huge chance in 2 years we'll move to San Francisco Bay area anyway. I have heard a lot people buy condo there and keep for few years and sell and then with that $ buy dream house or whatever!!

The mortgage that we are pre approved of is for 30 years and fixed rate-that's all I know. The mort. broker called me and left a message, but I've not called her back yet caz honestly, I really don't know what to say at this point.

And the weird thing is we still didn't see the Apt yet! The realtor called us and cancelled the viewing -well, first of all when I called him-he said the one that we are interested in was no longer available so he said there was another one if we wanted to view it. So, I said ok, and made appointment- on the day of the appointment he called to tell me that the tenants are moving next week so once they move out then he would show us!!!!! So we are basically waiting for him to call us back and in the mean time the mortg lady called us to know what we decided!!!!

Originally Posted by phathui5

We have bad credit and we just got a mortgage loan for $5.87%

WOW!!!! How that happened??? We have pretty good credit. We checked last year and I know it didn't get worse, probably got better or stayed same. I have score 730 and husband's score is 731. So, not sure what's going on with us. Yeah, one thing is we have $10,000.00 loan :

Originally Posted by Nemmer

Ask what the closing costs would be, and request a GFE (Good Faith Estimate).

What's that?

Ok, few facts -when the lady asked me about our savings-I said we didn't have any! We want the first time home buyer thing-with 0% down payment. We recently bought land back home so, we spend that money there and right now we don't have any $. Even if we didn't buy anything still we would have wanted to do the 0% down payment thing caz it wasn't that much anyway-it was only $12,000.00. So, I don't know if that made the interest rate go that high! But I know that in this country with crappy credit score and decent income people do buy houses with 0% down payment, and I wonder how!

I will absolutely be going to other banks.

I'm wondering what determines the closing cost? Few days ago I got this offer by mail from ING Direct Bank about a home loan thing with no closing cost. Not sure why they have no closing cost thing!!

[Holiztic]

GFE (Good Faith Estimate) is a rundown of all of the costs that your lender is expecting you to pay at settlement. It will add up all of the lender fees like appraisal fees and a bunch of other random fees you'll look at and say "what the heck?" Some of them are legit, some of them are "junk" fees, I don't know well enough to tell you more than that. However, ING and many other lenders are able to waive these types of fees, maybe someone else could explain why. Closing costs also are charged by the title company doing the closing. You'll also have to pay title insurance for the lender (required) and yourselves (optional). I don't know how that works with ING though. Come to think of it, ING would waive the appraisal fee and the lender fees, but you still would have to pay the title company fees and taxes and such, so there would still be some closing costs (just no lender closing costs).

We really wanted to use ING, but they require (at least they did 2 years ago) that you put 10% down. That would have been 22k for us and even with no closing costs, that was twice what we had. So we did 100% loan and paid closing costs from our savings. You say you don't have any savings at all, most loans do require some closing costs, on 100k you'd probably be looking at a few grand (I don't know about things like transfer tax in NY). Around here it would be about 3-4k.

I also missed in your original post that you called up the listing agent. The listing agent has a MAJOR interest in selling you one of HIS homes (so he'll get the full 6% commission). If you do use him, make sure you call him up and tell him which homes you want to see (based on online listings). DO NOT just rely on him to find the homes for you. But like the PPs said, it would be better to find your own realtor (unless you really like this guy).

And a final note: is 100k in the Bronx for real? I realize the Bronx is cheaper than Manhattan (DH's best friend lives there), but 100K? Wow! Be sure you see these places and look around the neighborhood, stop in a few stores, make sure you would be comfortable living there!

[Shiloh]

I'd get the agent first...our old apartment built with big problems (foundation never dried out, black mold within first year, building citations for dangerous cracks, falling concrete, spalling (concrete starts comming apart)....
so a year after it was built they decided to turn it condo....

yep with basically guarenteed financing for anyone.
They were so desperate to get it off their hands...

[Altair]

just wanted to add that the whole "that one already sold/rented, but i have another" is a VERY common NYC realtor ploy. in many cases, the original apartment doesn't even exist. it's just a way they get clients.

1. find a realtor you like, not tied to an apartment you like. tell the realtor what you are looking for. make sure the realtor knows you want 0% financing (which is hard in NYC)

2. shop around for mortages and look into NY state sonoma loans/grants. (i think i spelled that right, you can google it)

3. 100K isn't going to go far, even in the bronx, so make sure you get a really good inspection of the building. all i have seen in that price range that is livable are some small studios in very out-of-the-way locations.

[cj'smommy]

You've had some good advice so far, a place we checked for interest rates (we just got approved for a mortage ourselves) was LendingTree.com. They give you up to 4 banks and their offers. We took that to our bank and not only did they beat those deals which were good, but we also got a future refinancing at no charge.

HTH some and good luck!

[noorjahan]

Ok, so I contacted ING Direct. Holiztic, yes, still they want some downpayment. But zero closing cost. I still went ahead and apply for the pre apporval thing. This time I told them I haven't seen the Apt yet( which is true) therefore, I don't know how much it will cost. But absolutely we won't buy anything more than $200k. So, the offer we got from ING is:

ING
Rate- 7%
Amount-$200,000.00
Term- 30 year BUT first 7 years fixed after that adjustable- Nope I don't like this part!
Downpayment- 5000.00 (more depending on the price)
Closing Cost- 0.00 (little bit we still have to pay which will be around 2800-3800 but can chip it in the loan)

Today hubby went to a local bank Washington Mutual-
Now, looks like they are better than Citi (the rate they offered is 7.375%)and ING

Washington Mutual
Amount- $200,000.00
Rate- 6% and something (can be negotioable when we REALLY apply)
Term-30 year and Fixed
Downpayment- 0.00
Closing Cost- $6000.00 -ish (apparantly that can be brought down too!)


Thanks everyone for the shopping around idea!!! Now, we are feeling little better and looks like we will shop MORE and then seal the deal!

As for Bronx being cheap- there are some places in Bronx that is not CHEAP at all.....but we are looking at a cheap place though. And today after work for the first time we went there- looks ok so far- near everything all the shopping centers, SUBWAYS- nice park- CLEAN (thanks GOD)! BUT it seems little quiter than I would like!!! But we will be going there few more times definitely not only to look apt but also to walk around neighbourhood and stuff!

Oh also, I found out about this non-profit organization they offer free seminer/classes on first time home buying. I'll be so going there and it's on May 7th-Can't wait!

Now, I'm feeling very excited~!

[RiverSky]

Originally Posted by noorjahan

Oh also, I found out about this non-profit organization they offer free seminer/classes on first time home buying. I'll be so going there and it's on May 7th-Can't wait!

Now, I'm feeling very excited~!

Good for you, it is all very exciting. I'm glad you found a class, that's great. When I started getting serious about buying a home, I took a bunch of books on real estate and buying homes out from the library and I tell you, it helped me so much to read, read, read and actually have an idea of what was going on in all aspects of the transaction.

Two suggestions I'll give are to get your own, new, realtor, a Buyer's Broker if you can find one, and to make any offers that you submit contingent on an inspection. Very important. Good luck!