Downpayment Issue

[therealpotentials]

Please help my friend with his downpayment issue. This is what he told me of his situaiton.



So I began the preliminaries to having a home built in edmonton. I have 25% of the downpayment. The builder has accepted my offer to pay the remainder of the downpayment in installments throughout the next 10 months (approximate time to build). As per my bank, I have a perfect credit history, my FICO score is slightly above average,and my debt ratio is fine. the bank has pre-approved me, but has advised me that CMHC requires proof of the entire downpayment and 1.5% of the total price, for closing costs, BEFORE the mortgage will be approved... AS WELL, CMHC also noted it is likely I will require a guaranteur.........????? [/color] have I worked hard at building a perfect credit reputation for the last 15 years for nothing? why in the world would I need a guaranteur? And if I do not want to deal with CMHC, I need to come up with $75000.... Is there a way to make this work without having to find $21,000 for my downpayment and closing costs in the next 2 weeks? ...OR...how do I find $21,000 in the next 2 weeks?? Any suggestions are GREATLY appreciated. Thank You.

 

[DanHeon]

Hello there,This is a very tough spot to be in. I can only think of two reasons of a co-signor being required. It would be that your credit file is a bit on the shakey side. The only way to confirm this would be to pull your own credit and review it and see why it may be viewed this way. www.equifax.ca and you willl need the scorepower report to see what the lenders are looking at. The only other reason would be that your income to expense ratios are very tight. What i mean by tight is that they are close to the maximum allowable limit. So they may be suggesting a cosignor in order to tip the scale in your favor. Your banker/broker setting up this file should be shedding some light on the issues. The down payment is a non issue. If you put less than the 20% down then you must use CMHC. you can aquire your loan approval from the bank and have the down payment as one outstanding item that needs to be confirmed at least 30 days before you move in. This does leave you at risk though if you are not able to come up with the rest of the downpayment for some unforseen reason. If you have a back up plan... ie friend or family as a "Just in case" then it may be ok. But without having all your money up front you do leave your deposit money at risk.I hope that helps,Dan HeonBroker/Owner

Canadian Mortgage Team Alberta

Mortgage Centre Canada

t. 403.257.1801 (ext. 4)

t. 780.701.7100

f. 403.206.7622

t.f. 1.888.281.0111

www.DanHeon.com

[email protected]

 

[RobMacdonald]

I`m not completely clear of the situation here. It sounds like the lender wants proof of the full downpayment today. If your friend only has 25% of the downpayment, or the initial deposit, then he should be able to get a conditional approval for the financing. Over the next 10 months, he will need to prove that he has accumulated the down payment amount, plus 1.5% closing costs and paid it to the builder accordingly.

If he borrows the downpayment, then he must be approved under a different program. It sounds to me that this should be straight forward, as long as he is accumulating the funds from his own resources or from a qualified family gift. He probably just needs a differenet lender of mortgage broker.

 

[ibuildstuff]

It sounds to me as though you have little or no money down (25% of 5% down??). You should have stopped at the bank for pre-approval first. Many homebuyers jump the gun by starting with the builder...first find out what you can qualify for with your current cash situation, then see the builder. Less likely to be let down that way. CMHC adds their two bits since they are the ones insuring your high ratio (risk) mortgage. Save up some more money and try again next year. Unless someone "gives" you $21k, you are done for now.

 

[tbarcier]

Rob is right, if you are not closing for 10 months why would you need to show it now? I`ve had long closes before and had to show it 90 days before close. You need a different broker/lender.