All Forum Posts by: Eric Veronica

Feel free to reach out if you'd like to discuss specifics.  i sent you a PM as well. 

There are always exceptions however I find it very unlikely that a lender will extend a construction loan on land that the borrower does not own.  Even if you were able to find a lender willing to do this I am not sure it would be in your best interest. You may be able to transfer the land and ask the seller to carry a 2nd lien position on the property, but the land would still transfer into your name at closing.  By closing, I am referring to the up front closing which occurs before a shovel goes into the ground. 

Unless there is more to the story, it seems like there is a much simpler solution.  Instead of trying to mess around with seller financing why dont you just put less money down and close the lot and construction loan simultaneously?  If you, you have a contract to purchase land for 200k and a contact to build a home for 450k then you have a total acquisition cost of $650,000.  We can close a one time close vacation construction home with as little as 10% down.   With $65,000 down you can buy the land and fund the entire build.  

Problem solved, right?

I would highly recommend asking your lender if they are quoting a conventional Fannie/Freddie mortgage or if that is a different product type entirely. As a couple other lenders mentioned, if this is a conventional Fannie/Freddie loan then that lender is far below market.  So far below market that they likely are losing money by offering those terms.     

Homepossible is normally going to beat FHA in most scenarios. The only time we typically see FHA being a beter option is if your score is in the low - mid 600's.

Most of the time FHA interest rates and monthly PMI dont vary much whether your credit score is 650 or 800 whereas conventional rates and PMI will can swing wildly based on your credit score. If you qualify for homepossible the interest rate adjustments normally associated with conventional loans are waived so the interest rate is pretty much the same whether your credit score is 650 or 800. The monthly PMI can still vary with Homepossible to the key is comparing the monthly PMI for homepossible vs the monthly PMI for FHA. Also important to consider the fact that FHA charges an upfront mortgage insurance premium that is typically 1.75% of the loan amount.

Quote from @Patrick Roberts:

Quote from @Eric Veronica:

Fannie Mae conventional mortgages allow for the transfer to an LLC as long as the borrowers hold a majority ownership interest in the LLC. Below is a link to the Fannie Mae selling guide illustrating the allowable title transfers. Below that is a snip from the guideline addressing the LLC Transfer.

@Patrick Roberts mentioned that you need 12 months of ownership but I am not familiar with any type of seasoning unless something change recently.

https://servicing-guide.fanniemae.com/svc/d1-4.1-02/allowabl...

 The seasoning comes in when the borrower originally funds it as a primary. I dont believe there is any seasoning if funding as an investment. Could be wrong about that though

 @Patrick Roberts Correct.... i read it the same way. The guideline is written in a way that is a bit confusing. I am not sure why they reference the occupancy requirements when explaining the tranferring to an LLC.

 Yes this is allowed for investment properties. 

These guidelines are from Fannie Mae selling guidelines.  Loan application documents or loan documents you sign at closing do not include loan specific guidelines. 

Fannie Mae conventional mortgages allow for the transfer to an LLC as long as the borrowers hold a majority ownership interest in the LLC. Below is a link to the Fannie Mae selling guide illustrating the allowable title transfers. Below that is a snip from the guideline addressing the LLC Transfer.

@Patrick Roberts mentioned that you need 12 months of ownership but I am not familiar with any type of seasoning unless something change recently.

https://servicing-guide.fanniemae.com/svc/d1-4.1-02/allowabl...

If you want a legitimate preapproval then you should be doing a tri-merge "hard" pull.  

Props to  @Erik Estrada for shooting straight.  His explanation is spot on.  If you are unwilling to be committed enough to a lender to even allow them to do a credit pull then they are probably less likely to take the time to provide you a detailed cost/fee breakdown especially when they know you have a lineup of lenders that you are considering. 

Your question asking for detailed loan estimates from multiple lenders at the preapproval stage with  "exact cost to close" is very problematic. This isnt a "Mayank" problem.  This is an industry problem.  We as the lender are tasked with estimating countless figures for customers even though the lender has very little control over most of the figures.  The title company/settlement agent is responsible for more than half of the costs listed on a settlement statement.  Very rarely are we provided with those figures up front.  

We  dont know if we are closing on the 1st of the month or the 30th of the month so we don't know if we are collecting 1 day of interest or 30 days of interest.  Often times we don't know the exact transfer taxes because they can vary by state, county and even city.  Even if we do know the exact transfer tax, we haven't seen the contract to know if the transfer taxes are being paid by the buyer or the seller or if they are being paid 50/50.  What about property tax prorations.  Does the seller owe the buyer money or does the buyer owe the seller for property tax prorations?  Is your home insurance going to be $1200/year or $6,000/year.  Are you escrowing taxes and insurance or are you waiving tax and insurance escrow...... and on  and on and on.  

The main problem is that most customers just look at the bottom line and mortgage loan officers know that.  There are many loan officers who will intentionally lowball all the third party costs and prepaid items up front so their estimate will look more appealing.

If you really want to compare multiple lenders then you just need to focus on the part of the transaction that the lender controls.  If you provide your credit score, purchase price,  estimated down payment, property type, occupancy type and desired term, then most lenders should be able to provide you with their current interest rate, any associated points or lender credits for the rate provided, and their total origination fees.   If you are shopping based on rates and fees, these answers should provide you the detail needed to make an informed decision.  

HI Andrew, 

There can be some flexibility around the 2 year history depending on the situation.  What were you doing before October 2023?

You can re-freeze your report if you want.  You will just need to lift the freeze again about a week before closing.