When I bought my house in 2007 getting a mortgage–a big one–was pretty easy. Banks were lending left and right.
We all know how that turned out, and that things are different now.
I am now trying to sell that house and have been approached by buyers who had “some kind of problem” with getting a mortgage approved. They want to rent for six months before buying, and somehow I guess they plan on getting that problem fixed during that time.
So is having problems getting a mortgage approved a gigantic red flag nowadays? Selling a house on today’s market is a b#*%^ and I don’t want to turn away potential buyers without a really, really good reason.
It’s much more difficult as far as I can tell - but I’m just one data point.
When we refinanced 2 years ago the loan officer said at least 5 times during the closing “I can’t belive this got approved - we’re not lending to ANYONE”.
It wasn’t that the details of the loan were bad, we have great credit, lots of equity, very little debt, plenty of income to cover all our obligations. He was simply suprised that any loan was approved.
Again, just one data point and this was 2 years ago, but thing have definitely changed as far as I can tell.
I am trying to sell a house now as well. I purchased the house in 2002 or so, and got my mortgage criminally easily. I have had several offers on the house, none to my liking. My most recent offer was for the asking price, but the guy wanted to move in and pay me for a few years (rent to own was his title for his plan). When I told him no thanks, he became kind of angry. He told me that things were done differently these days.
Bought my house less than two years ago. I started by obtaining a pre-approved mortgage before even looking at houses. Called the bank, they faxed over the application. Filled it out, faxed it back, and 30 minutes later they were on the phone offering me more money than I wanted to spend. I’m a veteran, and went with a VA loan, which may have made a difference.
I’ll be watching this thread with interest. I am currently in dire financial straights due to massive credit card debt and stupidly high interest rates. I have quite a bit of equity in my home and was hoping to refinance to alleviate the debt.
Got mine a few months ago with only a 3.5% down-payment. Had to fill out a crap load of paperwork (FHA loan), but was still able to start house hunting, negotiate a deal, and close within about 8 weeks.
My credit score was not great (650) and I was carrying a lot of debt (over 200K), but my income was solid compared to home price (my income was equal to over 50% of home price).
But considering my situation, I can’t think it’s all that hard to get a loan.
Yeah - we refinanced in late 2008/early 2009 and had to jump through a LOT more hoops, paperwork-wise - and this was with using the same lender we’d already been with. Same as you: good credit, good equity, etc.
Here’s an article on lease/purchase options:
Some of the info may be out of date since it is an 8 year old article. Kass writes a real estate column for the Washington Post. I’d definitely encourage a consult with a lawyer, and doing your full credit check etc. on the buyers.
So far my refi’s been super easy, but I have an excellent credit history and a low debt to income ratio. The only holdup is convincing the second lien holder to maintain its junior position, since, well, they have zero equity in my home anyway. I’m assured that that will be automatic, and that the only issue is a backlog of requests (I don’t know the veracity of that, though, and if that ends up not working, I’ll just pay off the second.)
I wonder if wanting to rent for six months is some kind of scammy behavior?
Update: turns out the people have a recent bankruptcy. They gave us a formal offer in which they would pay HALF the rent they originally proposed, for THREE TIMES as long (18 months), before closing for ten thousand dollars below our asking price (already reduced 22k from what I paid three years ago).
Their agent communicated to our agent that they would take a while to respond to us because they were going on a vacation to Mexico.
We gave them a resounding middle finger. Translated into realtor terms, of course. The bank won’t accept their risk and neither will we.
Uh, yeah. Someone with a recent bankruptcy should still be in the middle of the “pay every spare dime to make partial payment” portion of the process, and wouldn’t have enough cash to go to Mexico.
Unless it was to score more of the drugs that they are clearly overindulging in!
We just finished refinancing earlier this month. The paperwork was slower than before, and we had to submit a lot more documentation, as well as have an actual, real, live appraiser walk through the house. We have excellent credit (both of us have scores over 800) and were refinancing for far less than the house is worth, so we were surprised the process took more than two months.
I wouldn’t have minded the Mexico part if it hadn’t been in the context of them trying to buy a very nice house when they’ve just lost everything–a nice house that they don’t currently have the means to buy on the up-and-up. Jesus people, rent an apartment for a while. Leave me alone. No I am NOT going to shoulder half the cost of YOU living in MY house for a year and a half, then possibly deciding not to buy, when I could keep it on the market–which will almost certainly improve in those 18 months.
Good decision!!! Even if they hadn’t modified the rent and duration, I’d recommend against it. Once someone is living in your house you can’t assume it will be easy to get them out.
You may well have some trouble – depends on your income. But there’s no reason not to try, and usually you can get a yes or a no without it costing you anything.
But a warning to everyone applying for a loan – read all the paperwork over very carefully. Banks, in my recent experience, are unbelievably, criminally careless about details. It’s no wonder to me they’re in the trouble they’re in. Basic competence seems to be in short supply in that industry.
