# Sub Prime ?



## RICHNTRISH (Jun 4, 2008)

Hi, We are hoping to move to Florida late 2009 on an E2 visa as we have already discussed , we were hoping to finance the whole move from the equity in the sale of our house here along with other assets , cars etc , keeping our rental flat as back up . Its hard to judge exactly what we are going to need to spend , buying the business then all sorts of fees and professional help solicitors, accountants etc , but we figure we are going to be about $100-150k short to buy a house for about $400k . 
I definatly want to buy and dont want to be renting for very long , would we be classified as "sub prime " and find it difficult to get a mortgage as we are not citizens and are self employed , probably with only a few months records or would our high percentage of deposit help us?
Or maybe we should try to secure some finance here before we leave , i guess we could always pay it off in full if we are able to get a mortgage in the US , what with your lower rates than ours .
Thanks Richard.


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## twostep (Apr 3, 2008)

You will be considered high risk - lack of credit history will be your issue. Very few reputable lenders still touch that.


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## RICHNTRISH (Jun 4, 2008)

Thanks , thats what we figured i guess. Best to arrange some finance before we go then i suppose ,looking at about 7.5% apr unsecured here at the moment.
How long would you normally need to be there with good finances before your considered credit worthy ?
Richard.


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## Bevdeforges (Nov 16, 2007)

As twostep mentioned, you basically start out with no credit history at all. That will actually make it a bit more difficult to rent, as most landlords will want to verify your credit history, and lacking that may ask for larger deposits or a rent pre-payment scheme for the first year or so.

One other issue - I've talked to a US bank about what provisions they have for mortgages for newly arrived immigrants. This bank (small regional bank in the Northeast) said that normally they require a larger deposit and they will only make the loan for the period covered by the visa.

IIRC, with the E2 visa, you're subject to annual (?) renewal - and have to show that your business is still viable. It might pay to work directly with a bank, and perhaps use that same bank for your business venture. If they are working with both your business venture and your home mortgage, they may be willing to help you work something out. (But expect them to ask you for a fairly detailed business plan.)
Cheers,
Bev


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## twostep (Apr 3, 2008)

Bev - will you community bank lend outside the footprint? Does the cahrter allow it?


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## RICHNTRISH (Jun 4, 2008)

Do you think a copy of our credit history in the UK would help in anyway ? Its easily available on the net these days for a small fee .


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## Bevdeforges (Nov 16, 2007)

twostep said:


> Bev - will you community bank lend outside the footprint? Does the cahrter allow it?


It's not a community bank (as I understand the term). It's simply a regional bank - not yet bought out by one of the big, national banks. I've found them much more flexible to work with once you establish yourself as a customer. (I don't have a mortgage with them, admittedly, but asked them about their policies for some research I was doing.)
Cheers,
Bev


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## twostep (Apr 3, 2008)

Bevdeforges said:


> It's not a community bank (as I understand the term). It's simply a regional bank - not yet bought out by one of the big, national banks. I've found them much more flexible to work with once you establish yourself as a customer. (I don't have a mortgage with them, admittedly, but asked them about their policies for some research I was doing.)
> Cheers,
> Bev


AS you say - once you are established as customer. A commercial note may be a an option.


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## Bevdeforges (Nov 16, 2007)

RICHNTRISH said:


> Do you think a copy of our credit history in the UK would help in anyway ? Its easily available on the net these days for a small fee .


It can't hurt to have a copy handy, but I've never known any one in the US to accept a UK (or other non-US) credit history. They simply have no way to evaluate it.

FWIW, it works the same way in reverse. My US credit history has never been relevant while I was in the UK, Germany or France. 
Cheers,
Bev


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## EVHB (Feb 11, 2008)

Without a credit history it's also interesting to take a look at a house with "owner financing". If you can pay a good downpayment and you can proove you have sufficient funds and a reliable job, that might be the way to buy a house without a loan shark. At least, that is what a realtor on an other forum told me. We were talking about a house from $ 500,000 and we could give a downpayment of 50%.


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## RICHNTRISH (Jun 4, 2008)

EVHB said:


> Without a credit history it's also interesting to take a look at a house with "owner financing". If you can pay a good downpayment and you can proove you have sufficient funds and a reliable job, that might be the way to buy a house without a loan shark. At least, that is what a realtor on an other forum told me. We were talking about a house from $ 500,000 and we could give a downpayment of 50%.


Owner financing ?? Whats that all about then ? We would have about 75% deposit but self employed .
Richard.
Ok just Googled it , does that actually ever happen ?It would never happen here .


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## twostep (Apr 3, 2008)

It is nothing out of the ordinary. I have seen it mostly for small starter homes at loan shark rates.


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## synthia (Apr 18, 2007)

When the market gets bad, and the sellers don't need all the cash right away, they might be willing to hold the financing. Also, in the current market, mortgage interest rates are rather high compared to what can be earned at the bank.

If you can put 75% down, even in this market you should have no trouble at all getting financing for the rest, since the lender will be taking very little risk.


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## Bevdeforges (Nov 16, 2007)

RICHNTRISH said:


> Owner financing ?? Whats that all about then ? We would have about 75% deposit but self employed .
> Richard.
> Ok just Googled it , does that actually ever happen ?It would never happen here .


Getting the seller to take back a mortgage on part of the selling price depends entirely on the seller's situation. The current down-turn in prices may work against you here, particularly if your seller has a large balance left to pay off on his mortgage. But it doesn't hurt to ask.

You're asking the seller to play banker and accept deferred payments over some period of time. You need to win the trust of the seller (i.e. that you'll pay up without any hassle) and your best chance is probably with a seller who is going to be staying in the area. 

I turned down an offer on my house in the US that included my taking back financing on the deal because I was already in Germany. If the buyer simply stopped paying, it was going to be a huge problem collecting - plus, I couldn't even drive by the place and throw rocks at the windows. If you do propose owner financing, think of making it easy for him to say yes.
Cheers,
Bev


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## EVHB (Feb 11, 2008)

It's easier if there seller doesn't have a financing on the house anymore.


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## RICHNTRISH (Jun 4, 2008)

synthia said:


> When the market gets bad, and the sellers don't need all the cash right away, they might be willing to hold the financing. Also, in the current market, mortgage interest rates are rather high compared to what can be earned at the bank.
> 
> If you can put 75% down, even in this market you should have no trouble at all getting financing for the rest, since the lender will be taking very little risk.


Hi Synthia,
Do you mean with a 75% deposit we shouldn't have much trouble getting finanacing from this owner finanacing method or do you mean we should be able to get it from the main stream banks on our own ?, which would be my prefered method .
To be honest i would of thought a bank would lend the 25% as they are holding the deeds with our 75% so it would have to be a massive collapse for them to lose . I know we will be self employed , new to the country and no credit history doesn't look good , but a tricky one i guess .
Richard.


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## RICHNTRISH (Jun 4, 2008)

Thanks everyone.


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## synthia (Apr 18, 2007)

During the last downturn in the housing market, seller financing became more available, as it was a way to get an edge in the market. A takeback is a lot better than a foreclosure. Also, it's possible to sell the note to someone else.

I meant with a regular lender. All those loans that went south were of the 05 down variety. 75% is close to cash. Remember, some sellers have already lowered their prices more than that.


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## Fatbrit (May 8, 2008)

synthia said:


> Also, it's possible to sell the note to someone else.


It was many years ago possible to transfer a note from a seller to a buyer. But notes these days are payable in full on sale. (Not to say that the holder of the note can't xfer it to another holder!)


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## twostep (Apr 3, 2008)

Transferrable mortgages are still around. Rates are above average due to the additional risk to the lender/investor.

Very few lenders portfolio mortgages and then only a limited number of prime ones. Most mortgages are sold wholesale at closing. It does not affect the consumer as it does not change any terms of the note. An authorization to sell is a standard document at a loan closing even though it is part of the actual note verbiage as well.


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## Fatbrit (May 8, 2008)

twostep said:


> Transferrable mortgages are still around. Rates are above average due to the additional risk to the lender/investor.
> 
> Very few lenders portfolio mortgages and then only a limited number of prime ones. Most mortgages are sold wholesale at closing. It does not affect the consumer as it does not change any terms of the note. An authorization to sell is a standard document at a loan closing even though it is part of the actual note verbiage as well.


What are we talking about here? A note in a thousand? Ten thousand? You used to commonly see MLS listings with the note term and rate listed for transfer. Not seen one of these in years, however, even though the fields still exist on most MLS listings.

On the xfer of your mortgage to another lien holder, you don't have any choice. But there was a problem some years back with predatory mortgage servicing -- another place where the consumer has no choice. There was talk of legislation -- but presumably the fact many are in negative equity as house prices decline so there's no killing to be made has made it moot. For anybody interested, there were a lot of examples on Ripoffreport.


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## twostep (Apr 3, 2008)

Fat - I do not know much about real estate sales from the brokers' point of view. Plus different parts of the country have different trends even now. Our neighborhood has prices going UP! 
I am rather familiar with the lending aspect of it be it mortgage or commercial.
We assumed one loan and learned our expensive lesson. For us it has been sale-by-owner ever since.


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## Fatbrit (May 8, 2008)

twostep said:


> Fat - I do not know much about real estate sales from the brokers' point of view. Plus different parts of the country have different trends even now. Our neighborhood has prices going UP!
> I am rather familiar with the lending aspect of it be it mortgage or commercial.
> We assumed one loan and learned our expensive lesson. For us it has been sale-by-owner ever since.


You were lucky to find one that didn't have a "due on sale" clause if it's recent. FHA and VA loans were the last of the mainstream loan products to prevent assumption, and that was at the end of the eighties!


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