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Getting a mortgage?

Getting a mortgage?

Old Aug 5th 2004, 10:32 am
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Question Getting a mortgage?

Does anyone here have any experience to share re. getting a mortgage in the US?

Someone I know in my company relocated to the US fairly recently and says that he got a mortgage no problem, within about 1 month of arriving. And that was with no credit history.

Any thoughts?
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Old Aug 5th 2004, 10:45 am
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Default Re: Getting a mortgage?

Originally posted by a lad insane
Does anyone here have any experience to share re. getting a mortgage in the US?

Someone I know in my company relocated to the US fairly recently and says that he got a mortgage no problem, within about 1 month of arriving. And that was with no credit history.

Any thoughts?
We got our mortgage before we moved over so that we could close the day after we arrived. We came over to look for property in January, found the house, saw a mortgage expert, put an offer on the house then left the country. The mortgage broker and our realtor (registered trade mark) handled everything in our absence. The international credit check basically consisted of a three way conversation where I asked my creditors how long I had been with them, how much credit I had and was I in good standing (data protection act, don't you just hate it, luckily everything about you is public knowledge here)

So, to summarise, if your credit is good in the UK, you have 20% to put down and you have a promise of employment in writing you
can get a mortgage straight away.
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Old Aug 5th 2004, 12:05 pm
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Our experience is slightly different from Patrick's.

We lived in apartments for the first 9 months that we were here. We had enough equity from our UK house to put down 10% on a home here, but not 20%. The only reason 20% is important is that you need a 20% deposit to avoid the rather expensive "mortgage indemnity insurance" which your mortgage company will charge for lesser deposits (but there's a standard way around that).

As with all things financial over here, my Credit Union was enormously more helpful than any bank would have been in the same situation. They found me a mortgage broker who had dealt with H1B visa holders like myself before, and I worked with him from there.

Normally I wouldn't recommend a mortage broker, who can add another level of fees to your mortgage application. However, our broker managed to get us the same mortgage rate as any USC with perfect credit would have been offered - where mortgage companies approached directly by me for a quote often quoted 2 or 3% above the "standard" rate.

What we needed was proof of my employment here, and of my salary and details of my bank account activity since we arrived in the US. Other than that, not much. No international credit check, even though our credit score was not particularly impressive after only 9 months. Again, the fact that all my banking had been through a Credit Union who knew me and my company helped a great deal.

Finally, to avoid the Mortgage Indemnity Insurance we took out an 80/10/10 loan. This is a principal loan for 80% of the value at a standard mortgage rate, a 10% second loan (from the same company!) at 1.5% above the mortgage rate, and a 10% cash deposit. That saved us a few thousand dollars, if I remember correctly, in insurance fees, even once the higher interest rate was factored in.

I hope this helps. I really can't over-state how useful we've found it to belong to a Credit Union where we are known by name and our situation is understood. It's allowed us to overcome credit history problems and all the other financial hassles without a hitch, and now we're finally in a home we love!
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Old Aug 5th 2004, 12:35 pm
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Originally posted by dbj1000
Our experience is slightly different from Patrick's.

We lived in apartments for the first 9 months that we were here. We had enough equity from our UK house to put down 10% on a home here, but not 20%. The only reason 20% is important is that you need a 20% deposit to avoid the rather expensive "mortgage indemnity insurance" which your mortgage company will charge for lesser deposits (but there's a standard way around that).

As with all things financial over here, my Credit Union was enormously more helpful than any bank would have been in the same situation. They found me a mortgage broker who had dealt with H1B visa holders like myself before, and I worked with him from there.

Normally I wouldn't recommend a mortage broker, who can add another level of fees to your mortgage application. However, our broker managed to get us the same mortgage rate as any USC with perfect credit would have been offered - where mortgage companies approached directly by me for a quote often quoted 2 or 3% above the "standard" rate.

What we needed was proof of my employment here, and of my salary and details of my bank account activity since we arrived in the US. Other than that, not much. No international credit check, even though our credit score was not particularly impressive after only 9 months. Again, the fact that all my banking had been through a Credit Union who knew me and my company helped a great deal.

Finally, to avoid the Mortgage Indemnity Insurance we took out an 80/10/10 loan. This is a principal loan for 80% of the value at a standard mortgage rate, a 10% second loan (from the same company!) at 1.5% above the mortgage rate, and a 10% cash deposit. That saved us a few thousand dollars, if I remember correctly, in insurance fees, even once the higher interest rate was factored in.

I hope this helps. I really can't over-state how useful we've found it to belong to a Credit Union where we are known by name and our situation is understood. It's allowed us to overcome credit history problems and all the other financial hassles without a hitch, and now we're finally in a home we love!
Agreed absolutely on belonging to a local financial institution (a small bank is just as good) where you are known personally. In general a mortgage company or bank couldn't give a hoot if you are creditworthy, so long as you have a decent deposit and the house is worth more than they are lending you....
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Old Aug 5th 2004, 12:58 pm
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Run a credit check and see what you score is. I was very surprised how high was. I got a mortgage with my hubby no probs.
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Old Aug 5th 2004, 1:02 pm
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Default Re: Getting a mortgage?

Originally posted by a lad insane
Does anyone here have any experience to share re. getting a mortgage in the US?

Someone I know in my company relocated to the US fairly recently and says that he got a mortgage no problem, within about 1 month of arriving. And that was with no credit history.

Any thoughts?

Ask that person in your company who got the mortgage for more information?
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Old Aug 5th 2004, 1:34 pm
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Default Re: Getting a mortgage?

We used a Mortgage Broker, mainly because it was somebody my Wife had used before and to be fair she did a really good job.

I am sure it varies State by State as so many things do here, but just for guidance on CO:

Most people do use a Mortgage Broker.
For reasons I can not understand 30 year fixed is still the most popular, even when you know you will not be keeping the Mortgage anything like that time.
Rates are historically low.
Your Credit Score does make a difference to the rate
The Mortgage Broker turns up at Closing with the Money, Closing was a weird experiance, 2 hours signing paperwork. Buyer, seller and advisors all in the same room!
You can lock in to a fixed rate, sort of like playing chicken as if you lock some time out it will cost a bit more on the rate
You usually get Origination fees, a percentage of the loan you pay up front.
You get tax relief on all of the Interest at your highest marginal rate.

A link for info:

http://www.monstermoving.monster.com...nance/Comment/
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Old Aug 5th 2004, 1:50 pm
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***How long have you been here/what you credit score?***

If you have been here a while and can't use an international check for whatever reason, your fico score is what determines whether you are sitting pretty, or get shafted with a sub-prime interest rate

I got an 80/10/10 loan which as DBJ says, helps you avoid PMI

DON'T pay points - they are bullshit

UNless you are looking to live in the property for a long time, DON'T get a fixed rate

Get an ARM (adjustable rate)

they range from 1 through to 7 years (so fixed for 7 years then adjustable)

Shop around - look at www.bankrate.com to compare rates

many brokers/mortgage companies will string you along - DON'T take their [email protected]

Its like most things in the USA, most people are ignorant and get taken for a ride - its only when you are knowledgeable that you are in a position of strength
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Old Aug 5th 2004, 1:59 pm
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Default Re: Getting a mortgage?

Originally posted by Boiler
Your Credit Score does make a difference to the rate
Yes and no (In Texas at any rate).

Virtually zero credit reporting history, 30 year fixed rate mortgage = 6%.

The guy at the bank told me that, unlike applying for non-secured credit, all they looked for was a BAD credit score, a ZERO credit score due to being an alien made no difference at all.
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Old Aug 5th 2004, 2:03 pm
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www.bankrate.com to compare rates

For what its worth, I just looked at the Bankrate rate for when we took out our Mortgage (3/1 ARM) and it was what we are paying, I had not appreciated that rates had moved up so much in such a short time.

ARM's might not be for everyone, you are effectively buying Insurance locking in, just realise its cost and then its value to you.

But then they have just taken a hike in the UK.

The Bank of England has raised its base rate by a quarter of a percentage point to 4.75%
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Old Aug 5th 2004, 3:12 pm
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When we were over in March, we were told by a realtor that 100% mortgages are possible now.

Is this the case?
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Old Aug 5th 2004, 3:21 pm
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Sure

But its a bit like the 100% Credit deals, no one refused on Cars - you pay

Here everything revolves around your Credit rating, Mortgage seems one of the few areas where they will take into account non US ratings but if you want to borrow 100%, however structured, you will pay for the privelege.
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Old Aug 5th 2004, 6:25 pm
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i got a 3/1 arm, only looking to live in the area for a while...

this is a pretty good broker i have heard - www.madrate.com

current rates:

1 Yr Arm 3.25%
3/1 Arm 4.375%
5/1 Arm 4.875%
15 Yr Fixed 5.125%
20 Yr Fixed 5.50%
30 Yr Fixed 5.625%
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Old Aug 6th 2004, 3:56 pm
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Originally posted by AndySmithers
Agreed absolutely on belonging to a local financial institution (a small bank is just as good) where you are known personally. In general a mortgage company or bank couldn't give a hoot if you are creditworthy, so long as you have a decent deposit and the house is worth more than they are lending you....
To make sense of the mortgage application process you need to understand the mechanics behind the US mortgage business.

:lecture:

All banks in the US sell almost 100% of the mortgages they originate. When you take out the mortgage the bank pays out the sum you borrowed to the vendor, however within a few weeks the bank has recovered the money it paid out by selling the mortgage, typically to Fannie Mae of Freddie Mac (government backed mortgage securitizing agencies).

The effect of this arrangement is that Fannie Mae and Freddie Mac determine the overwhelming majority of the conditions of US mortgages as they require mortgages to be "standard" so they can parcel them up as a homogenous bundle of debts and issue bonds. So then Fannie Mae and Freddie Mac sell bonds secured on the mortgage bundles, meaning they get their money back too.

Meanwhile the office to which you send your monthly mortgage payment has almost certainly changed from your friendly local bank to a faceless office in another state - this is the "mortgage servicer" and they collect mortgage payments and, after collecting their fees, divi up the proceeds and send them to the bond holders (see above).

There are exceptions - such as "jumbo" mortgages (ones bigger than Fannie Mae and Freddie Mac will take), currently around more than around $325,000 I think. The interest rate is slightly higher to reflect the fact that Fannie Mae and Freddie Mac won't take them, and these mortgages are typically sold to an investment bank that will do exactly what Fannie Mae and Freddie Ma does - securitize them and issue bonds.

Any other mortgage that is non-standard is treated the same way as a jumbo mortgage, and is sold to a bank rather than Fannie Mae or Freddie Mac, hence the higher interest rate.

So, the bank does care whether you are credit worthy or not because if a borrow is of "low quality" then the mortgage isn't worth as much when the time comes to sell it on. Quality and interest rate are like a balance - the lower the quality of the mortgagee, the higher the interest rate has to be to ensure that the bank gets all the money back that the mortgagee borrowed.

Last edited by Pulaski; Aug 29th 2004 at 4:50 am.
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