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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127801  
Subject: Re: 1st timer-lots of questions for the pros Date: 11/29/2001 11:58 PM
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Hi apriv,

My husband and I are in the process of applying for our first home but only my husband's name will be on the loan. I do not work and we do not want me debt taken into account.

On the mortgage application you (and he) either checked off "WILL" or "WILL NOT" be using spouses assets & credit. If you chose "Will" then you can use the gifts to you, AND your credit history will be in consideration, otherwise not. If you chose "WILL NOT" then the gifts in your name CANNOT be used... even in the joint account (as they were sourced to you, and your sourced gifts were itemized to not be counted,) yet, because you are married your CREDIT may still be swept into the picture.

One potential way around this is for YOU to "gift" the funds you received to your husband (yes... take it out of one pocket and put it back in the other... just document the "gift,") then apply for the loan to be titled in your hubby's name "As his sole property." You will have to sign a quit-claim deed at closing to prove you have no interest in the property (though he can quit-claim you back onto title immediately afterwards... the whole dance is to give the lender 1st rights to the collateral should there be a default.)

Get an experienced loan BROKER to help coordinate this... a broker will know which lenders will be more lenient, and which will have better (and more understanding) underwriters.

So far in the process the bank hasn't asked for any of my information. Is this a common practice-in other words, do we have to worry about them all of the sudden asking about my debts?

All depends on the critical check-box mentioned above. It's also highly likely the underwriters haven't gotten anywhere near your files yet, and if you're using an in-house loan officer at a bank they're most likely fairly ignorant of the underwriting requirements (in todays's financing industry the in-house loan officers are the greenest, as it's a "safe, salaried job" so those least qualified to be in the business go there first.)

We received an approval letter subject to certain conditions. One of the conditions is that we need a letter to verify gift funds (no problem) and a copy of the check. We didn't think about it at the time but the check was made out to me (from my father)-will this be a problem (it is a joint checking acct) since I am not on the loan.

See above... AND consult a qualified, experienced loan broker (then use them instead of the banker.)

Also, the seller has agreed to pay 3000-4000 (haven't decided yet) towards our closing costs. Is this generally a problem?

Not at all... it's a great thing!

Could the bank add more conditions before final approval b/c there is not anything in the conditions about one thing on our credit report (6 years old) that we have disputed and is not paid. My husband explained it to them over the phone during application and the individual wasn't sure if we would have to pay it since the circumstances were kind of unique but anyway it isn't included in the conditions and we are wondering if he should bring it up or just assume we will not have to pay it.

Don't assume anything! It's HIGHLY likely that ANYTHING shadowy on your credit report will show up in final conditions. In fact, it's not unlikely that things TOTALLY UNEXPECTED AND SEEMINGLY UNREASONABLE will mysteriously show up in final conditions, at the last minute, giving you virtually no time to dig up the necessary paperwork and proofs.

Dealing with highly stressed and over-worke underwriters is a bitch... and today's underwriters are more overworked than ever in history (that's not an understatement.)

The better the work ofyour loan officer up front, the less likely the headache surprises in the end.

STILL... surprises can and do happen to even the best loan officers (as some of my own Foolish Clients will attest to.) What happens, and how you're treated when the SxxT hits the fan is TRULY the measure of the quality of the folks you've chosen.

Chose very very carefully, and good luck!

Cheers,
Dave Donhoff
Foolish Mortgage Broker
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