Profile picture for mrsfetterman

Comparing two GFEs... at what point in the process must we choose?

We are working to buy a larger home as our primary residence, and rent out our current home. 

We have two year's rental history on this home for 2011 and 2012, but we moved back into it in 2013 to be closer to family and to fix it up.  Lender A said we cannot count what the rental income will be on this home because we are currently living in it, and because we have less than 30% equity in the home.  Because of this, we have a very high DTI and can't qualify for a Conventional loan.  He said we qualify for an FHA loan, but we have to pay off our car loans and therefore deplete our reserves...

Lender B is claiming that she can count rental income on our current home, we don't need to pay off our car loans, and we don't need to show reserves in the bank.  She says she can get us into a Conventional loan. 

My question is are lenders really so different in their requirements? Or is Lender B blowing smoke? 

Can we fill out loan applications with both lenders and see who - in the end - can actually give us the better deal?  I realize we would be having to pay for two appraisals, but if we don't have to pay off our car loans and can actually get a Conventional mortgage we would rather do that... 
  • February 24 2014 - Bremerton
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (4)

To answer from a loan officers perspective, Lender A is correct they cannot use the rental income since you are currently living in the home and not renting it. If it was still being rented then that would not be an issue. In that case FHA is a good option.

My company has a lot of aggressive portfolio FHA products so in regards to lender B, I would be cautious. MAria is correct that many lenders have different products out there for extreme loan situations but most of them are through the FHA since they are insured loans.

I have never heard of a lender that will do a portfolio or some sort of special in-house program for a conventional loan since they are not insured by the FHA in case of default.

I would be very cautious of lender B , lender A seems to be more on point and truthful. 

Keep this in mind, for the most part, 95% of a ll lenders use the same guidelines since we all go through the same investors , Fannie Mae and Freddie MAc. So the rates and guidelines will primarily be the same. There are some profolio FHA products that may differ like what I offer as an example but not for conventional loans.

Hope that helps and good luck!
-Scott

  • February 25 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I would caution you on changing lenders more than 5 days after mutual acceptance if you use our statewide forms.  That might waive your financing contingency if not done with permission of the seller.  Consult your agent or an attorney before changing lenders.

I would suggest you also consult your agent about these lenders, or if they have a lender that they have used a lot.  Agents don't tend to like lenders who over-promise and under-perform.  It typically is the best way to find a lender.

You might also try a portfolio lender, like Washington Federal.  Because they don't typically sell their loans they have more flexibility.
  • February 25 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Yes, they can be that different. There are around 400 loan products out there. Each lender will have their variation on the major ones. There are also lenders who will tell a person something and then not be their for Closing. Ask your real estate agent which lender would best be able to help you in your present situation. We know which lenders do their part of the work in a timely fashion so that our clients can Close on time without a lot of drama. 

I would settle on the lender 30-60 days ahead of your Closing date. Changes after a certain point will jeopardize your ability to Close on time. 
  • February 24 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for daveskow
In my opinion  Lender  A  sounds  like they are more accurately  analyzing  your scenario regarding rental income

Sounds like  Lender B might be telling you  what you  want to hear ...you might ask this lender to  send your  conventional loan  request  throught their  automated  underwriting  system  asap and on to their  underwriter  BEFORE  having the  appraisal ordered  to  determine  for a certainty that the conventional  option is  definitely  approved......

when is your closing date  slated to be ?  make sure  you  have  enough time left to get this done ....
  • February 24 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.