Special Circumstances When You're Not a Typical Borrower

Real Estate Agent with Keller Williams Realty

With so many first-time home buyers applying for home loans you might want to konw what to do when you don't fit the mold for a typical buyer. Some thinks that might cause you to break the mold would include: being at your job for less than a year, showing a few late payments on your credit report, or being self-employed.
Here are some tips on dealing with some special mortgage loan situations:

A Problem Appraisal: Sometimes an appraisal comes in lower than you agreed to pay for it. If the appraisal value falls short of the loan amount, you might have to come up with a larger down payment or renegotiate the sale price. You might have to come up with a larger down payment to get your loan price down below the appraisal price.

Buying a condo or townhome: When buying a condo or townhome you usually receive exclusive ownership of the interior space and joint ownership of common areas.  Your lender will want to investigate the complex to avoid making a loan on a troubled condominium. The lender will pay particular attention to these details:

  • Percentage of owner-occupied v. rented units. Most lenders will want 60% or more owner-occupied
  • Is the construction finished? Most will look for 90% finished
  • Adequate insurance coverage, including hazard insurance.
  • Acceptable operating budget
  • Competent management
  • Adequate reserves to cover maintenance and major repairs, such as roofing or elevators

Make sure to receive the condo documents, articles of incorporation, and the bylaws of the homeowner's association. This should include notifications of ongoing litigation and special assessments. Read the condo documents carefully and make your approval a condition of the buy.

No-doc or low-doc loans: No-documentation or low-documentation loans are designed for entreprenuers or the self-employed, recent immigrants, and borrowers who cannot reveal information about their incomes.  You can pay a slightly higher interest for these loans. To secure one you need a substantial down payment, excellent credit history, and verifiable assets to cover closing costs. For one of these loans, you must have been self employed for at least two years, provide proof of sufficient assets, and have excellent credit.

Flawed Credit: You probably know if you have a problem in your credit history. What if you are taken by surprise, you can get a subprime mortgage with less favorable rates and terms.

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