imj0257

iTrader: (1)

Intro: I'm a noob to the whole home buying process. I've always rented an apt until a few years ago when I moved in with my then girlfriend now wife. She owns the town home we live in now.

Over the past few months we have been looking to move into a single family home and are really excited about it. We even got pre-qualified through Quicken Loans for way more than we are going to spend anyways. However, my wife works for a major bank and wants to use them for our mortgage because she gets discounted/no fees on some things and a slightly lower interest rate... I think she wants the conventional mortgage either 15 or 30 yr fixed (not sure on specifics.. this is her domain of knowledge).

After more and more looking and possibly thinking of putting in an offer, we contacted her bank to get pre-qualified. Now, they are saying they need 3 open credit lines from each of us (I think with 12 months history at least?). Her, no problem. Me, problem. I have my own personal credit card at another bank and a joint credit card with her at our bank. But that is it. I paid off my car several years ago so that is closed. I paid off my student loans just 9 months ago after 9 years of perfect repayment but they can't use that because it is no longer open?! 9 fucking years of perfect repayment history with no problems and it can't be used? Can they use my car insurance payment history? Netflix account? This 3rd credit line is fucking pissing me off.

The only other option is putting 10% down and they need to see that as available. We have a lot in savings but not quite 10%. Either we'd have to save up for another half year or year OR I could take out money from my 401k since I'm a first time home buyer but I really don't want to do that.

We both have excellent credit scores and easily have the income to pay the mortgage for the house price range we are looking at but this 3rd credit line is fucking everything up. Ridiculous if you ask me. Some people have 5 credit lines and buy cars that get repo'ed and other shit but because they have 3 credit lines the bank will loan to them but not to me?

Any ideas/input/insight/anything? Do all lenders require this 3 credit lines from each borrower?

justnspace

iTrader: (1)

if you have a Roth IRA with more than $5k in it, you can use up to i think $5k without any penalties for a first time home buyer.

TacoBello

Um... talk to them? They don't want to give you money, because you don't owe enough right now? That doesn't make a lick of sense.

Personally, I'd schedule an appointment with the bank and go over this stuff with them. There's no reason why your student loans shouldn't count- it's exactly what they're looking for- proof that you pay on time.

thoiboi

BUT realize it's essentially a loan on yourself and you must start paying back somewhat immediately.


Welcome to America


Agree with talking to them though, that sounds like an idiotic requirement that I've not heard of either. Sounds like just one of those, "ehh how many credit cards should each person have open before allowing them to take a mortgage" lawyer: "3? LAWLS" "OKAY!"

imj0257

iTrader: (1)

It is fucking idiotic.

TacoBello

talk to them in person!! there has to be a logical way around this.

or... sign up for a new credit card. I don't see what the difference is.

imj0257

iTrader: (1)

My wife said that since she works for the bank she has to talk to a specific group that deals with employees only, and that is only over the phone. So we can't go and talk to somebody in person.
I could sign up for a new credit card but then that would take a hit to my credit score AND I'd have to wait a year anyways to have 12 months history on it.

We are going to call them again tonight and see why the fuck my 9 years of student loan history that was paid off 9 months ago won't work.

nfnsquared

Before you waste your time trying to wade through red tape and possibly waiting a year to take their deal after establishing a 3rd credit line, find the answer to these questions to help decide if going with the bank is even worth it:

1. What fees are discounted and by how much?
2. What fees are free?
3. Slight lower interest rate? How "slightly lower"?

imj0257

iTrader: (1)

I will ask her that. My question is.. if we do go to another lender.. will the ask for the same things? 3 credit lines from each of us?

RenoTL

Good advice. Don't take from any money out of your retirement funds. You'll need that later. As others have said, you also need to know the specifics of what your wife's bank offers as well as what other lenders have to offer you. Based on what you have said, I imagine there will be places that will gladly help you buy your home.

ggesq

iTrader: (1)

I know this doesn't answer your question, but I would personally live in the home she currently owns and save more until you can put 20% down to avoid PMI i.e. of course your spouse's bank will waive that for you. Do a 15 year mtg if you can swing it.

justnspace

iTrader: (1)

^i, too, think like that and didnt want to offer that advice because he said he was having a hard time coming up with the 10%

KaMLuNg

iTrader: (5)

my mortgage broker just ran my credit and as long as my score and debt to income ratio wasn't too high it was good... they never specifically asked for 3 credit lines.

TacoBello

Yeah mine too. Albeit I'm in another country.

The only real thing we had to prove is that we were saving money for the down payment for at least a year. The fear is that someone falls into a bunch of money (inheritance, insurance, etc...) and decides to buy a house but isn't responsible enough to make monthly payments. Fair enough.

nfnsquared

That's not bad advice OP, but remember, mortgage rates are at an all time low right now. If you wait until you can pay 20% down, it's very possible that interest rates could rise enough to cost you more in interest over the life of the loan than paying PMI now.

Also, at these low rates, my recommendation would be to stick with the 30-year mortgage and pay extra toward the principal each month. This way, should you happen to run into a financial bind, you can always revert to the much lower payment if need be.

doopstr

They are you off, F them.

But I suspect it's because you are looking for a low money down loan.

justnspace

iTrader: (1)

cant guess or time the market, but its been "historically" low for my entire adult life

cu2wagon

I was going to mention the 20% down thing as well. But that's been covered.

I would say that with rates as low as they still are, Banks are still nutting all over themselves trying to make loans. If this one is giving you a run-around, try another. Good, bad, or indifferent, I've had 2 loans with Wells Fargo. Sure they don't seem like the fluffy, happy, local FCU, but they also aren't as derpy as the small FCU I used for a loan in the past.

It pays to shop around but you need to make sure you're looking at the bottom line, which means figuring out the total expenses for each lender. Your girl's bank might not be best in the long run and it doesn't cost anything but your time to go chat with a lender on the weekend.

Nicks2001tl

Never hurts to shop around. Quicken gets good ratings and also look into if a fifteen year mortgage is viable. With a fifteen year you pay some more per month but your done in fifteen years.

The three most important factors in my opinion.
-Not paying PMI.
-Get a decent interest rate.
-Closing costs

RenoTL

Not mine! I can remember mortgage rates in the high teens. Use a mortgage calculator and see what the difference is on borrowing the sum you need at 3% or 4% vs 16% or 17%.

thoiboi

HIGH TEENS?! that's basically credit card territory !

also well, justin is a tad younger than you (by about 3x )

cu2wagon

Coincidentally, they were in the high teens when I was too.

TacoBello

Ok, Bill Cosby. How often are you in high teens?

imj0257

iTrader: (1)

Right now we are thinking of saving for a short while til we get to the 10%.

But my wife just brought up a new idea... my '04 TL is getting old... we both think I'm going to need a new car/SUV soon... Get a new car = 3rd credit line and if we did 30 yr fixed + car payment it would be very similar to just a 15 yr fixed rate. Hmmm.

cu2wagon

Dude, you need to sit down and figure your shit out.

Bouncing from idea to idea to idea like that is like a recipe for poor financial decisions.

You and the wife should block out a couple hours to sit down with some pen and paper or Excel, or whatever and take assessment of your current financials. List out all your debts, income, savings, investments, and cash on hand. List out what you *need* and what you *want*. Then start assessing how much it would reasonably cost to accomplish them.

Bounce that against what you are earning, what you can afford, and what the near term future may hold (layoffs?, promotions? < -- warning on using that one as a "sure thing" though, new kiddos?, moving to another state?, etc.).

Get a holistic picture of your finances and well being to figure out what you can and should afford.

Figure out how much you can reasonably save each month and how long it would take you to save 10%, or 20% for a down payment on the house. Can you tighten the belt, financially, a little bit to bulk up your saving? Figure out whatever your end goal is and work backward to the present to figure out what it'll take to get there.

FWIW and IMO, cash is king. In general, if you can't pay for something outright, you can't afford it. Perhaps the one caveat to that is real estate. And for that instance, you want to minimize the amortized costs by putting down more up front and getting the best interest rate on the shortest loan you can afford each month.

So, to that end. *My opinion* and not knowing fully your situation, is to sit tight as long as you can and save that cheddar. If your car is paid off, it's generally going to be cheaper to maintain it and keep it running than to buy a new one. Save the difference and put it towards the house. Figure out about what it'll cost to buy a house where you want and figure out how long it will take to get the down payment. Write it down. Write it on the refrigerator door, write it on the bathroom mirror, put it as the background of your phones, look at it every day and think about what your spending on and if it's getting you towards you goal.

Then buy that house, move in, start parking cars on the lawn, and make meth in the bathtub.

nfnsquared

Do you need a new car or just want one? My 04 TL has 235K miles on it and it's still going strong (even still has the original clutch).

At these historically low mortgage rates, I'd put the minimum down and accelerate your payments as able. On a $250K house, you could take that other 10% ($25K) and make more money by investing than you will be charged over the life of the loan...

doopstr

Taking on more debt, so that you can take on even more debt, is dumb.

imj0257

iTrader: (1)

I'm not making rash decisions. It just sounds.. exciting. But so does a new house. Yes, my car is falling apart. I personally hope to keep it as long as I can cus it's my baby but my wife thinks it's time to get a new one. Technically it would work.

The whole debt to for more debt thing is stupid I agree .. but that is why I'm here. Because I don't even have enough debt cus I paid it off and I'm being punished by the mortgage whatever system for not having debt. So. Yea. Venting.

NBP04TL4ME

I'm with KamLuNg. All the bank should really need to do is run your credit and check your debt to equity ratios. Now I certainly understand that post the mortgage meltdown crisis things, have tightened up a bit but having a certain number of open or revolving accounts or having to open up more to satisfy them is kind of silly. Shop around and as mentioned above find out what your wife's bank is going to waive or reduce in terms of fees, etc. Credit unions are often less than banks.

justnspace

iTrader: (1)

I became an adult in 2005ish...
just in time for the crash!!

and has been low ever since. and will be low for a while, until i'm ready to buy a house anyway.

justnspace

iTrader: (1)

Ian, it really sounds like you dont know specifics!
sit down and compare loans from every one, not just your wifes place of employment.

I know where I stand in regards of down payment, closing costs, fees, etc.. and you should too, know the specifics of everything.