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Mortgage VS. Cash

I am currently going through the loan process with astronomical headaches. I won a lottery 7 months ago and have an annuity every year. Right before I won the lottery (month prior) the company I worked for went out of business, my credit is far from perfect. I have been pre-approved with conditions. I guess my question is should I continue with the mortgage process and still risk losing the house I want or take the cash I can get for the lottery and buy the house?
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August 28 2010 - Windsor
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Profile picture for darlene stanchina
Thank you all for your advice. I am going to make an appointment with my financial advisor tomorrow morning and see what he has to say about all this and also maybe look into a new broker. Thank you again.
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August 29 2010
Darlene, I'm with Shapiro - you need a new originator. 

You'll probably need to work with a direct lender that can factor in your new income source with your credit score; but I expect with a good down-payment you'll have ample financing options.
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August 28 2010
Profile picture for shapiroamg
Darlene,

You are in maine. I am not licensed up there but do know some Loan Officers who are. Please let me know if you would like their names.
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August 28 2010
Profile picture for shapiroamg
Jeepers, I'm not aware of a 10% down payment cap and a 1 year reserve requirement for FHA. Definately time for a new mortgage person for you.

As for credit being an issue, if you put down 20%+, you could have a score as low as 620-640 depending on the lender. You might have a higher rate because of the the lower credit score but in the end it might be better that being slammed into a FHA loan.

Sounds like someone might be trying to preserve a better commission.

Care to name your current mortgage person??
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August 28 2010
Based on you comments it sounds like you might need a new mortgage broker.  Talk to your financial advisor as he would be best to answer this knowing your situation..
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August 28 2010

Only 10% down doesn't make any sense at all.    You should be able to make as much down payment as you like.   It sounds like perhaps your broker wants you take a bigger loan than you need.

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August 28 2010
Profile picture for darlene stanchina
Due to credit I am only able to get fha loan and broker is saying that I will only be allowed to put 10% down and must have 1 year reserve. The whole process is very ridiculous and really getting on my nerves. I am not especially pleased with my broker as I ask her to answer questions in detail and basically get not to worry she will handle everything. I think it is time to consult my advisor again. I do realize refinance would be just as if not more difficult. I would on the other hand save an exceptional amount on interest alone.
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August 28 2010
Jennifer's comment "you can always refiniance later" is not accurate as millions of homeowners have learned over the past 2-3 yrs. I assume if your lottery winnings were substantial you have consulted with a financial adviser, and now would be a good time to revisit him/her. Having a large down payment is very positive but only part of the employment, credit, etc criteria required for loan approval. With less than perfect credit and interest/dividend interest income, obtaining a mortgage now and a refinance in the future could be difficult. If after paying cash you have substantial reserves and financial adviser concurs paying cash, that may be best option.  In between would be qualifying for as much mortgage as possible (not at hard money rates) and paying cash for the remainder. Don't base decision on refinancing later, as that may not be an option.
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August 28 2010
I would look into the Mortgage and yes you could still receive a nice low fixed rate.
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August 28 2010
Profile picture for shapiroamg
I like Joan's advice. You should talk to a financial expert such as a planner first. My general sense would be to go for a mortgage rather than tie up all your cash. There might be a happy medium  between cash and mortgage amount.

If you pay cash and want to cash out later by refinancing, there are mortgage guidlelines against that, so please due your homework.
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August 28 2010
I am not a mortgage or financial expert but if I was going to guess, due to your bad credit, your mortgage terms will be less than desirable.
I would talk to somebody who can look at the specific numbers with you and give you an educated answer as to which is the best way to go.
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August 28 2010
Cash sales are easier on all parties involved and cheaper to close. If you believe you can make the payments, I would mortgage the home for much less than the appraised value. Perhaps 50% or less. This will keep your payments low and be easier to get approved for the loan. If you are looking to close quickly because the home is a hot commodity, then you can always refinaince later.
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August 28 2010
 
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