#8 Postby Persepone » Fri Jun 01, 2007 10:43 am
I'd go to a small local bank that does business in the immediate area where you want to buy your house.
Talk to their mortgage rep. Ask them if they hold or sell their mortgages. Usually these types of banks hold their mortgages.
You want one that does.
First, these banks lend more on who you are and how long you've lived in a community, etc. than strictly on "credit scores."
In the end, even though you might get a slightly better deal on the interest rate from a Leviathan & Behemouth Bank Conglomerate, you'll get a better deal in the long run from that small local bank.
First, you are more likely to get a fixed interest rate, etc. than variable. Second, they are not going to be predatory lenders. What this means is that they will help you find a house that meets your needs and that you can really afford to buy. It may not be the house of your dreams--but it will be a liveable starter home.
Much more important, if you hit bad times down the road (and all of us do sooner or later), that small local bank will work with you and get you over the hump! The big bank or mortgage company will just foreclose because all they care about is your money... Small local banks also want their money--but they want your money more than they want your house, so they will work out a program to get their money.
In the end, you are better off dealing with one of those banks than you are dealing with the big monster banks and the mortgage companies--you will end up in a house you can live in happily until you can afford (really afford) to move to a better, nicer house, etc.
By the way, take all those credit reports in with you when you go to talk to them. Not only can they explain what/why the scores are different, etc. but they will tell you how they are used by banks, etc. and what to avoid so that you don't have the problem in the future.
They generally do not have houses for sale becaue they foreclose (because they avoid this and almost never do it) but they do have houses from time to time for sale from their "trust department." While foreclosed houses are often not good because long before the owners defaulted on a mortgage they stopped doing preventative maintenance, etc., trust dept. houses (someone died and had no one to leave the house to so it needs to be sold and converted to cash) are often in pretty good shape structurally and in other ways that matter, but need complete "re-decorating" not necessarily because they were lived in by someone who was dirty or did not repaint, but because the paint colors, etc. are not what you would choose. But hey, if you can save $20K on the price of a house because the bedroom is turquoise, buy it and repaint the damned bedroom! $20K buys a lot of paint... You'd be amazed at how much more important "curb appeal" issues are when selling a house than actual structural issue. So many of my friends have bought terrible houses from a structural standpoint because they "loved the _______" (something inconsequential they could fix for several hundred dollars). But the bank also knows just about everyone who has real estate for sale and they will probably have suggestions about 10-15 houses for you to look at that you can afford, that are big enough for your family, convenient to good schools or whatever else is relevant--and you'd never even know about those houses if it weren't for the bank.
Another good thing about those small, local banks, is that if you start there, you are looking at houses you can afford--not houses the realtor wants you to buy because of the commission the realtor stands to make. Even if you do, in the end, buy from a realtor, the day you start with the realtor, you have an upper limit on what you are willing to spend for a house and do NOT have to disclose any of your financials to the realtor. This is very important if you want to shop for "less house" than you can afford. We probably could have found someone to write us a mortgage for about double our mortgage--but we did not want to do that! We felt that we needed to keep our mortgage payment to something we were comfortable with on one income--and it is good that we did this because a few years later, my husband's company laid off a zillion workers and he was included. Many of his co-workers did lose their houses or were forced to sell in a down market, etc. We never told our real estate person what we could qualify for--we told her what we were willing to pay and assured her truthfully that we were prequalified for that amount.
We will make a bunch of money on our house when we sell it because it was the cheapest house in the neighborhood and because most of its lower price was due to cosmetic issues and the fact that the buyers needed a quick sale and did not have it together enough to fix it up to sell. Our good fortune is largely due to our bank.
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