Dec 14, 2011
Buying a home — a true and happy tale
14 Dec 2011
Posted by Andrew Kantor
I got a comment the other day about there being too much negative info here, so I want to tell a happy (and personal) story. I’ll keep it short, promise.
I bought a house a couple of weeks ago — well, my wife and I did. We had been renting for four years, and I had heard somewhere that it was a good time to buy, especially if you’re planning to stay put. We are.
I knew all the doom and gloom about getting a mortgage, so we were prepared to be declined, knowing there was a black mark on our credit from our last mortgage. (A story for another time.)
But we had found several homes in the $260K to $280K range that were spot-on perfect. We had to try.
We decided from the get-go that we were going to a credit union this time — specifically the Virginia Federal Credit Union (VACU) — for a host of reasons. It turned out to be an excellent decision.
We sat down with Connie, who handles VACU’s mortgages. She pulled our credit reports and — shockingly — didn’t escort us out of the building despite that (expected) black mark
and a few other bits of “negative information.”
Bottom line: My credit score was a bit under 700, and my wife’s was a bit above it. Right off the bat, Connie said, we qualified for an FHA loan, and if I got my score up we would qualify for a conventional, 30-year fixed VACU loan.
It’s just not that bad
Wait, what? What about all those headlines? We had that old mortgage mess, a judgment from a dentist, and medical bills in collection (that were were disputing). And we qualified?
Granted, our credit card debt is zero and we own our cars outright, but I saw the list of “negative information” on the report. And still they’d lend to us? Cool.
So over the next few weeks we paid all our outstanding bills, and VACU helped us work with the credit agencies to be sure every black mark was removed. Within four weeks, my score was over 700. We qualified for a conventional loan at 4.5% with a 5% down payment. (FHA would have been 4.25%, but that would mean it could end up being serviced by anyone, and we wanted to be sure it stayed with VACU.)
Oh, wait a sec….
Of course, it wasn’t that simple. VACU’s underwriters wanted us to explain every deposit that wasn’t a payroll check — e.g., all those flexible-spending account reimbursements, birthday checks from my folks, store refunds, etc. So there was a lot of letter writing; “The $17.34 deposit was from a jar of pennies we found stashed in the attic….”
Finally we had everything in order. All our deposits were checked, all our outstanding bills were paid. We were good to go… until Fannie Mae said we didn’t qualify for its protection. Why? Because our old lender said we had missed a payment in the last 12 months.
We hadn’t owned a house in more than three years! When confronted with the HUD-1 from the sale of our old house, the lender agreed it was a mistake, but wanted $40 to send the paperwork to correct it.
I declined that offer.
And then VACU did something wonderful. Rather than wait for the paperwork that would give the loan Fannie Mae’s blessing (a wait that could derail the sale) it decided to keep it entirely in-house. No secondary market necessary. No more paperwork.
We locked the rate, signed the papers, got the loan, and bought the house.
What I see
So when I see headlines like today’s in the Wall Street Journal, “Home Bargains Abound, But Willing Lenders Are Rare Breed,” I think of two middle-income folks with spotty credit who were able to get a mortgage at a great rate to buy a house at a bargain.
Yes, the market is bad. No argument, no doubt. But I can testify that it’s not quite as bad as the media makes it out to be.