Ask MetaFilter questions tagged with lending

Mortgage Shopping 101

Happydaz — Wed, 23 Sep 2009 08:27:06 -0800

What strategies would you recommend in selecting a lender and negotiating lending fees for a first-time home purchase? (Purchase is in rural Oregon). My wife and I are looking at homes in the $100,000 to $140,000 range, which is fortunate as the real estate market has tanked in the area where we're looking (Douglas County, Oregon.) We've made an offer on a house, and it qualifies for a USDA rural development loan. The big thing I'm trying to do now is decide whether to go with one of my Lending Tree offers or go with a local lender.

I've received good faith estimates from local lender, a trustworthy and friendly guy who goes to my church. I have also received good faith estimates from a Portland bank which responded to my Lending Tree request. I am not terribly concerned about appraisal pricing, or home inspection or title fees or other third-party costs they can't control. But I would like to know what's customary for a mortgage and what I can get waived. Right now, the local lender's price is coming in at $1,400 more than the Portland bank.

Here's what I think are the variables: Origination fee. Processing fee. Wire transfer fee. Underwriting fee. Credit report. Settlement/closing fee. Appraisal review fee.

Am I missing anything? What tips would you recommend in shopping for this mortgage? Am I taking a big risk by going with the Portland lender instead of the local guy? Both loan rates are at 5.25 %.

Mortgages in the US in summer 2009

crapmatic — Mon, 20 Jul 2009 12:15:32 -0800

How hard is it for average folks to get a home mortgage in the US right now? The banking crisis and credit crunch has obviously been big news for awhile and it's common knowledge that lending standards have tightened up a lot. Yet on the other hand I see lots of posts on creditboards about people with ~600 FICO scores that seem to be able to get mortgages -- and if I recall correctly, this was subprime territory even a few years ago. It seems like homes around my area are getting sold just fine, and I don't see any windows boarded up at the local mortgage companies.

So what is the lending climate like right now? Who is and isn't getting financed, compared to a few years ago? What aspects of a mortgage application are underwriters focusing on most heavily right now?

Answers should probably mention the kind of market or location since Omaha might be much different from Brooklyn.

Help me avoid being a loan shark.

Salvor Hardin — Sun, 21 Jun 2009 07:08:54 -0800

What's the scoop on the interest rates charged by Kiva's microfinance institutions? I am interested in lending some money via Kiva.org. Kiva has gotten pretty positive press, and the concept makes a lot of sense to me. However, I have heard conflicting and worrying things about the interest rates (averaging around 20%) charged by the regional microfinance institutions that Kiva uses to actually lend the money.

I have heard both that the interest rates are usurious, and also that they are way better than other interest rates that are available in impoverished areas of the world. It seems a bit suspicious that Kiva doesn't tell the lender (as far as I can tell) what the interest rate charged on their loan is. This FAQ from kiva.org seems to explain the high interest rate pretty reasonably, but IANAeconomist, so I feel like I could get suckered. This AskMe question has a bit of a side thread about this topic, but it wasn't very conclusive.

So: What's the real deal about Kiva? Do they suck the life out of poor people with predatory interest rates? Or is it the shining beacon of a new and better way to alleviate poverty? I also welcome any other insight about the pros/cons of kiva.org. Thanks!

We look good on paper. Or do we?

Sublimity — Thu, 28 May 2009 23:10:34 -0800

Any mortgage professionals in the house? I have a question about lending standards for small-scale real estate investors. My family is moving across the country this summer. My husband and I have a rental house and a residence in our current city. We are trying to decide whether to sell the house we now reside in, or to keep it and rent it. We'd like to keep it, if possible, but a big consideration is how this small portfolio would impact our ability to buy a house in our new city.

This article describes how lending standards have tightened in recent months when someone buying a house wants to keep their former residence. It sounds like 30% equity is an important threshhold with respect to the kind of cash reserves needed, and whether the bank will count rent monies toward payments on a rental house.

My question to the lenders in the audience is: in a situation like ours, would that 30% pertain to each individual house, or to the entire (small) portfolio?

I understand that You Are Not My Mortgage Broker. I just want to know in general how lenders think about these things.

When both houses are taken together, we're at about 37% equity. Individually, though, the rental is at about 65% and our residence is at about 10%. Conceivably we could do some refinancing to slosh the money around if needed, though I'd prefer not to if it weren't absolutely necessary.

Additional information that may prove relevant: rents would pretty much break even w.r.t. PITI + management fees. We understand that we'd pay for repairs and upkeep out of pocket and don't anticipate that will be a problem.

Thanks in advance for the help.

Is it 20% or PMI or nothing for me?

middleclasstool — Wed, 29 Apr 2009 19:36:22 -0800

What should we reasonably expect to need down for a mortgage when we move? All this is in the US:

So we bought our first house during the pre-crash boom, about five years ago. We were of course in the Land of Sweetheart Deals, mortgages being handed out like candy back then, and we got a loan for essentially 100% of the value of the house. I don't recall off the top of my head what we paid down, but it wasn't more than a few grand on a $140k home.

That plus only five years of payments means not much equity in the house -- my area (central Arkansas) hasn't been hit as hard as some of the rest of the country by falling house prices, so I'm guessing but have not yet confirmed that with the improvements we've made, at worst the house is back down to being worth what we paid for it, just by eyeballing other homes for sale in the neighborhood.

Well, now a combination of growing pains (toddler, plans to make another baby) and very shitty neighbors (long story) are making me very itchy to move. Ours is a starter home, just a small bungalow, which I'm given to understand are still selling fairly well here, what with stimulus money for first time homeowners and all that.

However, I know the lending market has puckered up. I'm very doubtful I'd be able to find a mortgage like this one, tiny down payment with no mortgage insurance, but I'm curious if there are banks doing loans like this (or an 80-20, maybe) for people like me who have awesome credit, a very good debt-to-income ratio, a two-income white-collar family, and a history of making mortgage payments every month for five years.

So bottom line: are my options realistically going to be either PMI, or save up $40,000 for that $200,000 house? Or are there banks looking at extremely low risk people like me and thinking "Hey we need some non-toxic assets on our balance sheet, so let's give him a deal?"

Yes, I know I need to actually go talk to mortgage lenders to see what's available in my area, but I'm hoping some of you are working in lending yourselves and can give me a sense of exactly how guarded banks are when it comes to issuing mortgages -- I'd hate to waste too much of a lender's time right now, as it'd realistically be at least several months to a year minimum before we're really ready to move.

I'm self employed and can't get any love from the lenders

Scientifik — Tue, 14 Apr 2009 15:08:08 -0800

How do I get a mortgage if I'm self employed? I'm self employed, have been so for about 2 years, business is doing very well in spite of the economy, I work from (a rental) home and have decided its time to buy a house. Nothing too fancy just a little 2 bedroom where I can work and play and all that.

I have good credit, a good chunk to put down but whats killing me is lenders are looking only at my 1040 Schedule C which is my income after all of my deductions. Basically the amount I'm taxed at. I make all the legal deductions I can so I don't get brutalized by the IRS however this makes my income look significantly lower and basically impossible to provide funding to.

No one at the bank has any answers other than either "Make fewer deductions" which means I'll pay significantly more in taxes, which means I can't put any money into savings. Or "Save more money" even if I save every penny I won't be able to buy a house for at least 5 years at which point who knows where housing will be.

Are there any lenders who specialize in the self employed or are a bit more reasonable and take more into account than just your tax returns?

Are there any options I have other than "wait"?

My irresponsibility knows no limits.

Zé Pequeno — Wed, 08 Apr 2009 12:00:24 -0800

I'm currently in the last year of a Masters in International Business. I thought that having an internationally-acclaimed economist as my thesis tutor would work out to my advantage. Having not even heard from him in the past six months, however, I decided to take the drastic but necessary step of sacking him. I also changed the topic to Microcredit in Brazil, a subject that interests me far more but instantly poses the problem of having to begin again from scratch. I hope I made the right decision. Anyway, I have to have my Literature Review on my teacher's desk by Monday. Please help. I've done a lot of generalised reading already, but I'm still struggling to come up with an original and compelling area of focus. The whole idea of microcredit seems extremely relevant at the moment given that ridiculously easy access to credit has been cited as one of the main contributing factors to have led to the current global crisis. Impoverised Brazilians - like impoverished people around the world - have had money practically thrown at them over the past five years or so that has enabled them to buy everything from satellite dishes to cell phones. Now the chickens are coming home to roost.

Microcredit, on the surface, at least, seems different - not least because of the very stringent lending procedures in place. I'm interested in exploring this contrast, perhaps investigating lending quality and what proportion of borrowing is truly made with the intention of investment verses mere consumerism. At the moment, however, all these ideas are terribly vague. Can anyone help me out with some ideas?

I shall be in Rio from June onwards and hope to be working with a microcredit institution during which time I'll have the opportunity to carry out some extensive fieldwork.

Before anyone mentions it, I am fully aware of how pathetic and irresponsible this is. My only excuse is that I've been very busy with an internship which, combined with a few recent personal problems, has left me completely drained and without the time I would have liked to have dedicated to this.

It's like herding Macs

godawful — Tue, 10 Jun 2008 14:04:55 -0800

How would you design and manage a system for lending out (and getting back) laptops within a medium-large company? I have become responsible for about 15 laptops that are in constant use, on an ad hoc basis, in an office with massive staff turnover (due to the nature of the business).

The only existing booking system is a shared Outlook calendar. Laptops are supposed to be booked, taken from an unmonitored cupboard, and returned to the same place. Malicious abuse of the system is not a problem – it's a nice friendly company – but there's no incentive to comply and chaos consequently ensues. I spend too much time tracking down what's supposed to be free and isn't, or telling people they can't have laptops that are in fact available.

I'd like to implement some sort of system with clearer incentives to comply. I'm not sure if there's an effective technological solution (Automatic reminder emails? Account lock outs?), or whether some softer, psychological approach will work.

How's this sort of thing handled in your company? What would you do to get a handle on this situation? Are there other technological solutions you'd recommend? Web-based booking? Strongly worded, passive aggressive notes on every laptop?

subprime definition

otio — Wed, 12 Dec 2007 06:29:51 -0800

Dear bankers and other financial experts: What is the basic definition of a subprime loan? I've seen "at least 2 points above prime," "at least 3 points above prime," "between 2 and 5 points above prime." Is there a single definition or does each bank define subprime differently? Related question: Is there a standard dictionary or encyclopedia of financial terms that you can recommend for these sorts of questions? Thank you.

where to buy plutonium for time machine

levijk — Tue, 11 Sep 2007 15:26:14 -0800

Lent money to a friend; now things are weird. Ran into a friend a couple months ago who was unemployed and had only nine days to come up with rent. I empathized with her because I've been in that situation. We chatted and went our separate ways. We're both poor but I realized I was in a position to help because my rent is cheaper and I don't socialize as much. That night I called and offered to pay her rent for the coming month. She was pounding the pavement and I knew her to be a responsible individual. She said it would be weird though, and had already decided to sell her car. I let her know that my offer was still an option. A few days later she called me back and with a hangdog tone accepted the offer. I assured her it would not be weird—I'd once loaned to a mutual friend and it had been fine. We didn't discuss how or when she'd pay me back, but not long afterward she got a job and set a date for just that. More or less on the date she promised I got a text inviting me to dinner to thank me and to pay back the loan. I was in the middle of a depression and wasn't returning calls. I texted her back a week later thanking her for the invitation and apologizing for taking so long to reply--I explained I was in full-on hermit mode (she knows this about me) but would let her know when I came out of the cave. A week after that I was walking downtown and saw her across the street with her sister. I waved but they didn't see me and I really wasn't in a talkative mood so I didn't pursue them. Then yesterday I saw her on the same street as I but a block away. I believe she saw me because she immediately whipped out her cell and dashed across two streets in what I can only assume was an effort to avoid me.

I feel bad about this. The whole point of paying her rent was to ease anxiety, not cause it. I've put no pressure on her. Maybe in the interim between our texts she spent the money and doesn't know how to tell me this? It's not a big deal; I really won't need the money until wintercapitalismfestival. My gut instinct is to just pretend I never saw her on the street and wait until we inevitably bump into one another (it's really not a large town). Then I thought of sending her a card saying there was nothing to worry about and that she could make incremental payments directly into my bank account whenever she had some extra cash.

What does the hive mind think I should do?

Do you lend books or tools?

kk — Mon, 05 Sep 2005 00:31:26 -0800

Do you lend your tools? Or books? If so, what tricks do you use to get them back? In my experience, friends who borrow tools, books, tapes hardly ever get them back to me in a timely manner. It is a rare person in this era of abudance who feels obliged to quickly return a borrowed item. That delay then slowly turns into never. Not getting borrowed books back has been a complaint from the Greeks onward, indeed for as long as books have existed. But still...Most of the time, most of my tools and books are sleeping on the shelf, bored out of their little minds, just waiting to be picked up and used, which makes them so happy, so when someone asks to borrow one, and I feel they could really use it, I usually say: "Sure." Off they go, rarely to return on their own. So beyond the obvious rule of never lending anything, what tricks, tips, methods do you employ which actually increase the probability of return? Putting bright colored labels with my name on it helps a bit, but most often I am reduced to tracking my lends and then personally requesting the item's return. I wonder if others have better schemes?

Small Business Administration loan experiences?

vito90 — Thu, 27 May 2004 12:56:04 -0800

Can you tell me about your experiences getting a loan through the Small Business Administration please? [more inside] I'm taking the entrepreneurial plunge! My last day at my current job will be tomorrow then I will be working full-time on my dream of opening a restaraunt. I'm told this is one of the industries the SBA frowns upon helping because of high failure rate, so I would especially be interested in hearing about loans specifically designed for that type of business. (But any experiences you care to relate would be welcome!)

I have some of my own capital and potentially another investor, but I will clearly need to borrow some money from a financial institution.

Thank you all in advance.