Q: I listen to your radio show often, and I am a big fan. On your show last February, I heard that a major lender was having a home show. My wife was approved for a $75,000 loan with a $3,800 down payment to buy a house. We found a house for $78,000.
A month later, the bank asked us to increase our down payment to $8,400 and we agreed. A month after that, they requested us to increase the down payment for the home to $24,000. Again, we agreed. But then they requested us to put down $37,000. Now, six months later our loan is still in "processing." I don't know if I should buy a house for cash or wait and see if I get approved. Is there any advice you can give me?
It's time for you to call the lender and get some detailed information. If you don't get a satisfactory answer, you can move up the chain of command by calling the national headquarters. Or you can move on to a different lender.
When you're buying a home, you should make sure you have your finances in good order by checking out your credit history and credit reports. Your lender should have pulled a copy of your credit history and obtained a copy of your credit report. They should send you a copy of the report along with your credit scores. If your credit scores are over 720 -- depending on the company that prepares the credit score -- your lender may not have a good excuse on delaying your loan application. But if you have limited sources of income and your credit score is under 720 (especially if it's in the low 600s), you will generally have issues with a lender in obtaining a loan.
We don't know what particular circumstances may affect your loan processing, but we would fault your lender if they have not given you information along the way to keep you well informed about your loan.
If your lender doesn't give you a copy of your credit report -- and they should -- you can get your own free copy at http://www.AnnualCreditReport.com. At this website, you can obtain a truly free copy of your credit report from Experian, Equifax and TransUnion once per year. When you download a credit report from each site, you may notice that each is a bit different, but they will indicate any credit information about you that they have in their files. If you have negative information reported on your credit file, you should see it in one of the reports. You will also see your on-time payment status with all of your credit cards, along with other information that they accumulate about you.
Again, if you can't or don't get good and accurate information from the loan representative you are dealing with, it may be time to talk to another lender. With today's low interest rates, it would be worthwhile for you to obtain a loan and lock in a rate.
(Ilyce R. Glink's latest book is "Buy, Close, Move In!" Samuel J. Tamkin is a Chicago-based real estate attorney. If you have questions, you can call Ilyce's radio show toll-free (800-972-8255) any Sunday, from 11a-1p EST. Contact Ilyce and Sam through her website, http://www.thinkglink.com.)