(RE)fi Land Contract

[lilgoose]

We are now 1 year and partial month out of Ch 7 Discharge....Unsecured Orchard Bank CC that is 1 1/2 months old...first month was annual fee pymt and the 1/2 month charge is the other day and filling up the vehicle to be paid in full when the bill comes.....Not late on any utilities or vehicle pymts.

FICO score about 3 weeks ago was upper 650s.

We are now into month 16 of a 36 month Land Contract. Each year into the contract, the interest goes up and so does our payment. Payment does go towards the balance of the amount of the house (have a breakdown monthly for the entire land contract as to the $$ amount that does pay down the balance). Escrowed in payment is the taxes and insurance. We do get all the benefits as a homeowner without the home being in our name. We get to deduct the interest paid, etc....on our taxes.

What we are wondering is this a REFINANCE or a PURCHASE? When should we try to put the loan over into our names? Does this make a difference on the subprime rates? Haven't a clue as to how to approach this.

This land contract was done thru a very reputable contractor and no fears of losing the house prior to the end of the contract.

Any idea would be great!! Have never done the land contract thing and am not sure how to finance.

[MTG_BANKER_OH]

We are now 1 year and partial month out of Ch 7 Discharge....Unsecured Orchard Bank CC that is 1 1/2 months old...first month was annual fee pymt and the 1/2 month charge is the other day and filling up the vehicle to be paid in full when the bill comes.....Not late on any utilities or vehicle pymts.

FICO score about 3 weeks ago was upper 650s.

We are now into month 16 of a 36 month Land Contract. Each year into the contract, the interest goes up and so does our payment. Payment does go towards the balance of the amount of the house (have a breakdown monthly for the entire land contract as to the $$ amount that does pay down the balance). Escrowed in payment is the taxes and insurance. We do get all the benefits as a homeowner without the home being in our name. We get to deduct the interest paid, etc....on our taxes.

What we are wondering is this a REFINANCE or a PURCHASE? When should we try to put the loan over into our names? Does this make a difference on the subprime rates? Haven't a clue as to how to approach this.

This land contract was done thru a very reputable contractor and no fears of losing the house prior to the end of the contract.

Any idea would be great!! Have never done the land contract thing and am not sure how to finance.

You are in a good position to refinance the home into your name. I take it this is a recorded land contract? One thing you can do it use any equity in the home to cover your refinance costs. This is better then doing a purchase because you can potentially bring nothing to closing. What do you owe on the land contract compared to what you estimate the house is worth?

[lilgoose]

Nick, I know that I had emailed about a year ago with you regarding this same issue....we decided to wait because of hearing about the subprime rates. Now, with refinancing, are we still in that same rate area or are they different? We would rather wait until the 2 year mark if we are. We are not going anywhere at this point and still have time to get the best rate possible.

As for the value of the home, I am sure that it has gone up. There was either a refi or new purchase just down the road from us that was around $170,000 (not sure what the comparison would be for sure)....Last September, a couple houses down on our side sold for $115,000. It is about 400 sq ft less than ours, but the lot size is about the same. It might be more of 2-3 bdrm 1 bath while ours is a 3 bdrm 2 full bath and about 1760 sq ft. Across the street and down a couple of houses, sale pending ($149,000) on one that is smaller being only 1325 sq ft, 3 bdrm and 1.5 bath. This property is 2.85 acres and ours is probably like .5 acres.

So, for value of ours, it is hard to tell. Newer siding, new furnace/ac and water heater. Painting inside is "in process". Basically move-in condition. Kitchen floor needs to be done and master bath also should be done. Just more worn than should be to sell. These are a couple of things that we don't want to put money into until we either need to or want to....

What would a rate be? Should we wait since we are not nearing the end of the contract?

Do appreciate your help!

[MTG_BANKER_OH]

Nick, I know that I had emailed about a year ago with you regarding this same issue....we decided to wait because of hearing about the subprime rates. Now, with refinancing, are we still in that same rate area or are they different? We would rather wait until the 2 year mark if we are. We are not going anywhere at this point and still have time to get the best rate possible.

As for the value of the home, I am sure that it has gone up. There was either a refi or new purchase just down the road from us that was around $170,000 (not sure what the comparison would be for sure)....Last September, a couple houses down on our side sold for $115,000. It is about 400 sq ft less than ours, but the lot size is about the same. It might be more of 2-3 bdrm 1 bath while ours is a 3 bdrm 2 full bath and about 1760 sq ft. Across the street and down a couple of houses, sale pending ($149,000) on one that is smaller being only 1325 sq ft, 3 bdrm and 1.5 bath. This property is 2.85 acres and ours is probably like .5 acres.

So, for value of ours, it is hard to tell. Newer siding, new furnace/ac and water heater. Painting inside is "in process". Basically move-in condition. Kitchen floor needs to be done and master bath also should be done. Just more worn than should be to sell. These are a couple of things that we don't want to put money into until we either need to or want to....

What would a rate be? Should we wait since we are not nearing the end of the contract?

Do appreciate your help!

I did a little research on your situation, I remembered talking to you last year. I beleive your land contract is unrecorded, if it is unrecorded then the only way you can use the appraised value and refinance would be to go subprime. If it were recorded for a year then you could use the appraised value, you may want to look at that route since you have some time until you have to exercise your option. If they are unwilling to record it and you want a conforming loan you will have to treat it as a purchase where you can not use the appraised value but the purchase price because when you buy a home you have to use appraised value or purchase price whatever is lower. If you want to refinance it instead of doing a purchase loan you are going to be subprime and your deal is not going to be that much better next year as opposed to this year because many subprime lenders do not care about the BK especially since it is a year out. You should get a decent deal if you owe less them 80% of the appraised value on the land contract and there would be no mortgage innsurance, where as you would have mortgage insurance if you had to do it as a purchase loan. I would estimate you can get a rate around the low 7's for a 30 year fixed if you have 20% equity.

[lilgoose]

Nick,

Good Morning.....As far as recording, no we haven't done that~our mistake, I know....

After looking at our land contract, we found the following:

Company in which this is through, claims title to address of our home, through a general Warranty Deed recorded in the Office of the County Recorder of county in which we live.

Does this sound as though it is already done? Can't call the court house today as they are closed....

Let me know..........Thanks.

[MTG_BANKER_OH]

Nick,

Good Morning.....As far as recording, no we haven't done that~our mistake, I know....

After looking at our land contract, we found the following:

Company in which this is through, claims title to address of our home, through a general Warranty Deed recorded in the Office of the County Recorder of county in which we live.

Does this sound as though it is already done? Can't call the court house today as they are closed....

Let me know..........Thanks.

It may already be recorded then you will have to look at the county recodrers site or the auditors site for your county and see if you can find antyhing there. For ohio the site for all of the auditors in the state is www.caao.org you may be able to find some information there. I also did some research and there are some lenders that will allow the land contract to be unrecorded and still use the appraised value on a conforming basis. I remember there being something about your husbands income that may or may not allow you to go conforming though, I could be wrong.

[lilgoose]

Nick,

I did find the address listed on a link from this site. I assume that this means that it has been recorded?

As for hubby's income, he is w2'd. I think you are thinking about his career and that is a truck driver. His income is actually up about 10k from the previous year's. There wouldn't be a problem with the debt ratio, etc.

Gotta ask again what a conforming loan would be?

Lu

[MTG_BANKER_OH]

Nick,

I did find the address listed on a link from this site. I assume that this means that it has been recorded?

As for hubby's income, he is w2'd. I think you are thinking about his career and that is a truck driver. His income is actually up about 10k from the previous year's. There wouldn't be a problem with the debt ratio, etc.

Gotta ask again what a conforming loan would be?

Lu

In the 6's now, with truck drivers though on a conforming loan most lenders aso for tax returns even if they are w2'ed ,so if your adjusted gross income reflects a high enough number to qualify for a loan then you should be ok, if not subprime loans usually not ask for the tax returns. The reason they ask is becaus many truck drivers have unreimbursed expenses that they write off on the tax returns, mileage, food, lodging, etc...

[lilgoose]

We ran into this situation before, where the ENTIRE tax returns were requested. Both of us feel that the information within our returns are privy to us and our accountant. With that said, we had to obtain a letter from the employer stating that he had no unreimbursed expenses. This wouldn't be a problem to get one stating this.

[MTG_BANKER_OH]

We ran into this situation before, where the ENTIRE tax returns were requested. Both of us feel that the information within our returns are privy to us and our accountant. With that said, we had to obtain a letter from the employer stating that he had no unreimbursed expenses. This wouldn't be a problem to get one stating this.

Most lenders may not take this, because the employer does not know if he has any unreimbursed expenses. A letter from your accountant that states that may work but otherwise it may be tough. I have never done a conforming loan for someone that drives a truck that we did not have to provide tax returns when we were doing a full doc loan. I am just trying to let you know how it may be a problem if you are not willing to provide the tax returns, because underwriters will look at it as what do you have to hide. There is a first time homebuyer program here in Ohio where you need to provide 3 years of tax returns order to get the loan no matter what your occupation is.

[lilgoose]

Exactly what part of the tax returns is needed?

3 years returns would not be a problem.

What is requirements for the other type of loan?

Not trying to be difficult, it is just that he is not an owner and therefore cannot deduct anything that any traveling occupation would be allowed to. He is not allowed to deduct truck washes, oil changes, etc. Any business person that travels could deduct meal expenses, lodging (which he does not do as he has his bed with him ) and other items. Do these same lenders request full returns from other types of occupations?

[MTG_BANKER_OH]

Exactly what part of the tax returns is needed?

3 years returns would not be a problem.

What is requirements for the other type of loan?

Not trying to be difficult, it is just that he is not an owner and therefore cannot deduct anything that any traveling occupation would be allowed to. He is not allowed to deduct truck washes, oil changes, etc. Any business person that travels could deduct meal expenses, lodging (which he does not do as he has his bed with him ) and other items. Do these same lenders request full returns from other types of occupations?

You can read about the program at www.ohiohome.org They would look at all pages, they have an income limit of around 64k but that depends on what county you are at in ohio, and that is household income so they even look at people not on the loan. For most loans you do not need to provide tax returns, it is usually when you are self employed, comissioned, or have the ability to write off unreimbursed expenses.

[lilgoose]

Our income falls under the guideline for the Mortgage Credit Certificate Program for the nontarget area....Four family members and one income. After reading the First Time, we also seem to qualify for that also. Also, the home price would also fall under.

Now, this is for purchasing only? If so, are we in the subprime time period? I understand that the subprime is higher than what it could be after the 2 year wait time.

What would we have to do to get the max out of an appraisal? Do you have an idea or maybe a "checklist" that we could follow to make sure we are maximizing our home's potential?

Really do appreciate this!!

[MTG_BANKER_OH]

Our income falls under the guideline for the Mortgage Credit Certificate Program for the nontarget area....Four family members and one income. After reading the First Time, we also seem to qualify for that also. Also, the home price would also fall under.

Now, this is for purchasing only? If so, are we in the subprime time period? I understand that the subprime is higher than what it could be after the 2 year wait time.

What would we have to do to get the max out of an appraisal? Do you have an idea or maybe a "checklist" that we could follow to make sure we are maximizing our home's potential?

Really do appreciate this!!

Currently you could probably qualify for a rate around 6.875 at 85% using the appraised value 30 year fixed probably with a 1 point.

It is hard to say without looking at sales around your home. There is not a ton you can do but make sure your home is updated and comparable with other homes in your area that have similar improvements. I have access to some things that can get you a ballpark figure that is not on the internet, I can also try zillow.com it is not real accurate but sometimes can get a you a ballpark.

[lilgoose]

Nick...Just sent you a pm.