Mitsy1212
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| Home Equity Loan Issues |
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I paid approx. 75,000 for my home 8 years ago. I owe about 42,000 on the original mortgage. I have also acquired about 20,000 credit card debt in the last several years. I went to my main bank to inquire about a home equity loan. I make about 42,000 per year and have a 750 credit score. My banker told me that as long as my appraisal went well, I was approved. He said they would do a "drive-by" approval estimate. Then earlier this week, an appraiser calls me to set up coming to my house and taking photos of EVERY ROOM in my house. I told her that "I don't think so". She said that she was an outside contractor who did not work for the bank and to call my banker. I did & he said that the computer automatically orders this but he would ask for a drive-by estimate (which is what he originally told me he'd do). Then I get another call from him & his supervisor who question why I don't want someone taking photos in my house. I told them I was fine w/someone coming to my house, meeting me in my living room, but that it was incredibly intrusive to ask to take photos of someone's bedrooms when this was not a total refinancing of my mortgage but only an equity line loan. Long story short, I could not get the loan without agreeing to this very invasive "inspection". I was not willing to let someone take photos of rooms I didn't show people & really it just seemed over the top. What is with this? Is this some quirky way US Bank has to put people in uncomfortable situations? I felt like I was trying to borrow from the mob. If I couldn't get a drive-by appraisal with my 30 year work record, high credit score and stable income, then I question how anyone with a lesser score could get one. I just hated this whole episode & will never try to borrow money from US Bank again.
Since then, I've gone with a debt management company which was more of a last resort but I was not going to let people come into my house & see every room even though I know my house is worth what I paid for it.
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Thu Apr 07, 2011 8:54 pm |
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oldguy
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A full appraisal is pretty standard - the appraisor measures each room to verify the sq footage of the house ( builders often round up a 1770 foot model home to 2000 ft). And they look for wall cracks (settling), water damage (indicates a roof leak), basement, etc. The lender needs to know that the house is being properly maintained before he will put his money into it. And he will verify that it is insured - if the house burns down, the lender takes most of the loss.
The pictures are the appraisor's way of documenting that s/he was there and saw all rooms. I doubt that anyone cares whether or not you made the bed or left clothes laying around.
But be aware, when you are applying for a loan, the more documentation that you can furnish, the lower your interest rate will be. If the lender has to write 'sq footage unverifiable", "access to basement denied', etc, then the lender has to assume that something is wrong - so you will get the higher-risk rate. So it's probably in your best interest to allow full access - that is what I always do and I get best rates on my houses.
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Thu Apr 07, 2011 10:55 pm |
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Mitsy1212
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Thanks for the info, but I also talked to 2 other bank people (one was a friend who worked at a bank) and one was another loan officer. They both told me that for a home equity loan, they had never heard of a full inspection like what US Bank wanted to do. If I was going to completely re-do my mortgage (a re-fi), I could almost see it, but not for a home equity loan that was not even for the amount of equity I had in my house. Also, there are records which give the square footage for my entire house. These documents are available (public knowledge) through our court house. But, it's US Bank's option to make as many hoops as they deem necessary for people to jump through. It's just a shame that people who have equity, excellent credit scores, long work records are put through the same hoops as someone who might have bad credit. That just doesn't seem fair to me. So, I have the option to not go through their bank if I don't like the terms.
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Fri Apr 08, 2011 3:32 pm |
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oldguy
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quote:
It's just a shame that people who have equity, excellent credit scores, long work records are put through the same hoops as someone who might have bad credit. That just doesn't seem fair to me. So, I have the option to not go through their bank if I don't like the terms.
Well, of course that is how the bank sorts 'someone who might have bad credit' from the ones who don't. They can assign someone to do a paper search on you, but only the way to see if they want to loan money against a property is to go look at the property.
And, as you say, if you don't like that bank's terms you don't have to borrow money from them. Personally, when I put loans on my rental houses, I prefer banks that do a thorough job of evaluating a borrower before they loan money to them. I expect an on-site inspection, a credit check, and a request for last year's tax return. IMO, the banks that give the "no documentation" loans are being sloppy with their depositer's money.
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Fri Apr 08, 2011 4:20 pm |
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Mitsy1212
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I would have been fine with a drive-by or even meeting someone in my living room. They could tell structurally what the house looked like by doing that but they wanted access to my personal living space (junk rooms) that I don't open up to show to others. I'm sure I'm not the only one who feels this was an incredible intrusion to get a loan that was not near my equity line. It made me feel like after giving them all the financial records necessary (tax forms included) that they were not willing to do an estimate by doing the drive-by or working w/me to do what was reasonable and comfortable for me as the customer. I'm sure they have lost other possible clients because they were not OK with someone photographing every room in their house. Talk about a big-brother mentality.
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Fri Apr 08, 2011 6:01 pm |
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FinTech
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Location: Florida
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| Appraisal, refi and other debt issues. |
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You can go to any number of websites to get an approximate value on your home. Just search for "home appraisal online". It's free. The point is to see if there is any possibly for a refi or heloc. Chances are it will be very little if anything based on today's home values. Hang onto your home and ride through the storm. Real estate is cyclical and it will come back, but will take time. So you need to address your credit card debt as a next step. Here is a caution regarding debt management companies. There is a better solution.
You need to protect your assets and most importantly, your income. Here is some advice of what to avoid.
You should run as fast as you can from any debt settlement or debt consolidation program. They are very costly, extremely ineffective and can leave you exposed to lawsuits.
First of all traditional debt settlement has well over a 70% failure rate, mainly because they provide you no protection from the creditors. They offer to settle your debts for average of 50%, they charge you 15% of your debt as a fee, then you pay income tax on the cancelled debt. When all is said and done you are back to at least 85% of what you started with in costs out of pocket. What did that accomplish for you? All during that agonizing 4 or more year process your credit is in the tank, precluding you from moving on with any of your financial goals. That's a long time to be exposed to lawsuits.
In debt consolidation you are trading an unsecured credit card debt for a secured debt backed by an asset such as your home. That is the worst possible financial blunder ever offered in the credit industry. This could cost you your home.
Bankruptcy? That should be out of the question when your major financial dilemma is unsecured debt.
Eliminating the impractical programs through logical analysis was easy. So what could possibly remain as a viable solution? Keep in mind that after all you have been paying the creditors high interest for years on your own money and not seeing the light of day…the principal just doesn’t seem to go down. That’s the way they want it to keep you in debtors’ prison.
There is an alternative to all of the above which is an all-inclusive means to satisfy the obligation of the debt where everyone wins. During the process you are completely protected, including every asset you own plus your income.
You can empower yourself with a unique method that enables you to pay off those accounts for 10 cents to 20 cents on the dollar. That means you can save 80% to 90% off on the balances your creditors say that you owe. You can be debt free in about 18 months, be protected from creditor liability lawsuits, saving you many thousands $$$ in out of pocket costs, no tax consequences and your credit will be restored at the end of the process. Do your research. Just Google "credit card debt resolution" or "zero credit card debt" and you can learn more about this tried and truly effective method which was authored by an attorney with more than 30 years experience in debt and tax matters.
Mike Kohl
Certified Debt Resolution Consultant
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Fri Apr 08, 2011 11:46 pm |
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Mitsy1212
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Thanks for the info, Mike, but the company I'm going through is accredited & has the BBB seal. They've been in business since 1991. They are not a debt reduction type company. They negotiated better interest rates for me and I make 1 payment to them which is paid to my creditors each month. There will be no lag time in between any payments, so my accounts will not be paid late and I was not in arrears to begin with. When I looked at the loan papers I was sent from the bank, I realized I was going to be charged 7.29% for the home equity loan. I originally thought it would be less than that, so I'm even more glad I didn't go with the bank because that interest rate is not too good in my opinion. I will be debt free in about 4 years, so I'm glad I took this route instead of going through the bank.
I agree though that debt settlement companies should be avoided. They can ruin someone's credit for a very long time and I was never not wanting to pay them off. The interest rates were just making it difficult to continue paying as I had been.
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Sun Apr 10, 2011 5:12 am |
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coaster
Senior Advisor
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Location: Wisconsin
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| Re: Home Equity Loan Issues |
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quote:
Originally posted by Mitsy1212
......this very invasive "inspection"....
Your description of an "invasive" inspection sounds to me very much like a standard full appraisal.
I had a full appraisal on my last refi, which was for about the same amount. I have a higher income and a better credit score. I don't think it makes any difference. Loan originators aren't allowing any leeway these days. They're required to provide full documentation if they want to sell the loan to the secondary market, which is what is usually done.
In my opinion, your objections are unreasonable, and when they stand in the way of getting your loan are not a financially prudent course of action.
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Sun Apr 10, 2011 5:35 am |
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Mitsy1212
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| Re: Home Equity Loan Issues |
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quote:
Originally posted by coaster
quote:
Originally posted by Mitsy1212
......this very invasive "inspection"....
Your description of an "invasive" inspection sounds to me very much like a standard full appraisal.
I had a full appraisal on my last refi, which was for about the same amount. I have a higher income and a better credit score. I don't think it makes any difference. Loan originators aren't allowing any leeway these days. They're required to provide full documentation if they want to sell the loan to the secondary market, which is what is usually done.
In my opinion, your objections are unreasonable, and when they stand in the way of getting your loan are not a financially prudent course of action.
I guess everyone is entitled to their own opinion. I talked to 2 other banks about how they handled a home equity loan and NEITHER did a full appraisal as that was not needed for a home equity loan. As I SAID, I was not doing a total refinancing of my mortgage and wasn't even asking for the amount that I had in equity. I say it was unreasonable for the amount I was wanting to borrow and if the drive-by estimate (and me showing them my living room/den area) was not enough, then I wasn't going to agree to the terms.
Banks have likely gotten stricter about their regulations but that is probably due to people who got loans and did not repay them (which is not my case at all). The people who have paid their bills on time ALL the time will always be screwed over due to those who would not pay their bills. That is the same case with the credit card interest rates. Good paying customers (like myself) were gouged because of those who would not pay. Not fair and totally wrong for people who have always paid on time and never let any account get behind.
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Mon Apr 11, 2011 2:39 pm |
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coaster
Senior Advisor
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| Re: Home Equity Loan Issues |
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quote:
Originally posted by Mitsy1212
Good paying customers (like myself) were gouged because of those who would not pay. Not fair and totally wrong for people who have always paid on time and never let any account get behind.
Unfortunately, you're entirely correct in that observation.
After my post above, I did some reconsidering. I think privacy concerns would be a valid issue. In that regard, these home appraisers are professionals and I'm sure they know that if they want to keep getting the business (since they're independent subcontractors for the most part) they need to address privacy concerns. So, here's a thought: the appraiser needs to see the interior of your home. They need to take measurements, take notes, and take pictures so after looking at a dozen homes they can go back to the office and remember what they saw and work up an accurate appraisal that's not based solely on their memory. Ask the appraiser to give you final veto over the pictures and notes --- ask the appraiser to allow you to look at them and if there's anything in there that intrudes upon your privacy, that picture or note will be deleted. A professional appraiser will understand this and have no problem with it.
The system is what the system is. You're not going to change it. It's financially imprudent to refuse the system solely because you don't agree with the way it works. The system is what the system is because it works to make money for the system participants. So, the financially prudent course of action is to work the system to get the result you want.
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Mon Apr 11, 2011 4:48 pm |
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Mitsy1212
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I suppose that is a thought, however, I would not have been comfortable with photos of any of my bedrooms and really did not want photos taken inside my house at all. In fact, I don't show anyone my bedrooms. I have 2 that are basically storage and my own bedroom is not what I'd show people either. I view bedrooms as private as I was willing to show my main living areas, but I was not given another option (with that bank) so sought alternative measures for my financial issues. Again, I was not going to get that good of deal with the 7.29 interest rate as I got that amount (or lower) on the debt management program. I also was not going to be able to take the interest off of my mortgage for next year's taxes. I'm not sure why but that is what my accountant told me when I did my taxes this year. So, I didn't really have a lot of options. I chose what I felt was the best for me & what I was most comfortable with.
I do hope, at some point, that banks & other financial lending institutions start rewarding people who have high credit scores & stable incomes with lower interest rates for loans. They sure do not want to pay people any interest who have CD's in their banks.
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Mon Apr 11, 2011 5:35 pm |
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coaster
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I hope you're right..... 
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Tue Apr 12, 2011 3:43 am |
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reversemortgageinfo
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| For homeowners 62 and older, a reverse mortgage is an option |
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The main difference between a home equity loan and a reverse mortgage, is that you have to be 62 or older to qualify for a reverse mortgage. You can recieve just a partial payment, a lump sum, line of credit or fixed monthly income with a reverse mortgage. And generally, you can get more money with a reverse mortgage. It eliminates your monthly mortgage payment and you don't have to pay it back until you permanently leave the home.
Stephanie Jameson
Reverse Mortgage Information
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National Reverse Mortgage
New York Reverse Mortgage
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Fri Apr 15, 2011 6:08 pm |
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jennypaul
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Home equity loans allow a homeowner to borrow money by pledging the house as collateral. Borrowers who want to borrow a relatively large amount of money or who don’t have good credit often find the home equity loan to be attractive.
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Tue Apr 19, 2011 10:33 am |
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