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Values of homes near shopping centers?

Discussion in 'Broadlands Community Issues' started by sds, Jul 7, 2004.

  1. sds

    sds New Member

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    We're moving from a townhouse in Broadlands to a single family home and I'm getting a lot of conflicting information. Our lender has told us that they will only finance a maximum of 75% of our home's value because it is very close to a shopping center, our broker said that is the stance of most lenders in that situation. I was alarmed with the information and asked her "do they look at this as a bad thing?" and she said "yes." So then I wonder why the house was appraised at (even above) some of the other homes in the same neighborhood (that are not as close to the shopping) if they consider this home only worth 75% of their financing?!?! I asked my real estate agent (who is also a broker, but not our broker) and she said "that's bologna! I've never heard of that." [:0][?]

    I'm wondering if anyone knows anything about this or perhaps has some unbiased words of wisdom in this situation; both these parties do not, and they conflict each other! I'm going to be calling some outside lenders today to see what they say, but I wanted some "real people" opinions on this as well. Thanks!
     
  2. Dwarflord

    Dwarflord New Member

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    I agree w/your real estate agent. A lending institution is in the business of making money, not losing it. With that said, if they can get you to put down 25% of the value of a home and you by chance default on the loan, they are much happier because then they can sell the home for 100% or more of its appraised value (not the 75% they claim), keep your original 25% and make even more money. I have never heard of this either and I would love to see them produce "ANY" kind of documentation stating that this is their policy or produce statistical information illustrating what they claim to be true. In fact, it may just be the opposite. It is bogus. It could be someone new to the profession. You know they hire these people off the street when refinancing booms take place to help with workloads.


    DwArFlOrD
     
  3. Pats_fan

    Pats_fan Former Resident

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    I agree with Dwarflord. The reasoning of this lender doesn't make sense to me. It seems to me that if a house near a shopping represents a greater risk, it would be reflected in the market value of the house. If the house's value is consistent with others in the area, I see no reason why a lender would treat the home differently.
     
  4. tigger

    tigger New Member

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    I'd go find another lender. There are plenty of lenders out there. I can't believe a lender would think having a house near a shopping center would be 'bad'. If you look at the apartment ads on the weekend, if they have shopping near by, they make sure to list it, as it's a selling point for some renters.
     
  5. MD_boy

    MD_boy New Member

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    I have never heard of such a thing either. Was this lender recommended by the agent? If so there could be something fishy. You are wise to shop around.


    Actually if a lender forecloses they are allowed only the amount of the outstanding debt plus any fees (which can be substantial legal fees) and taxes associated with the foreclosure and sale of the property. Any thing above and beyond that is returned to the former homeowner. Lenders usually require 20% down or PMI to cover possible losses which could occur if the market has a downward fluctuation causing the outstanding loan and fees to be greater than the actual value of the property.
     
  6. gammonbabe

    gammonbabe New Member

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    I don't think that the lender is being straight with you. I'm sure they would like to have a better LTV ratio, but that is just tough luck. An A paper has an 80% LTV, I have never heard of 75%.

    Find another lender. There are 2500 lending institutions in the United States, and I'm srue 2499 of them will be happy with a 80% LTV even if the home is close to a shopping center.

    M.
     
  7. sds

    sds New Member

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    gammonbabe, what is an LTV ratio?

    I'm not hip to your lingo! ;)

    thanks everyone for the advice. while it seems like it would be beneficial to get a different lender, we are closing in week (and believe it or not, we JUST got this info yesterday as the house has just been appraised). so i'm stuck with this lender (the broker is a relative of my husband to make matters worse). i was very put off that the shopping center could somehow negatively affect my home's value and upset that the info comes so late in the buying stage. Like tigger said, it's usually perceived as an asset!
     
  8. gammonbabe

    gammonbabe New Member

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    LTV is the Loan to Value ratio. Conforming loans have an LTV of no more then 80%. However, I don't think anyone in Broadlands has a conforming loan, since the prices for homes there are past the conforming loan limit of $333,700 already. So unless we pay a hefty downpayment we can not get a conforming loan and have to get a jumbo loan.

    And here is another thought ... if the downpayment they are asking for brings your loan down to the conforming loan limit, then it is easier for them to sell the loan to Freddie Mac or Fannie May. They can not purchase jumbo loans, so jumbo loans are sold to other investors and go a different route. However, if the mortgage bank you are dealing with only wants to originate conforming loans, then you still need to go somewhere else. Plenty of jumbo lenders out there.

    M,
     
  9. MD_boy

    MD_boy New Member

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    Just curious
    Who is the lender?
     
  10. gammonbabe

    gammonbabe New Member

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    Your broker can go with another lender, that is his job. YOU tell him that no, these terms are not acceptable and to find you a loan for the expected 80% LTV. He has all the paperwork, he has the assessment, a loan can be secured in a week. If he tells you it can't be done, tell him you will fire him and move your closing date if you have to (a little threat goes a long way, he wants his money).

    Back when we moved into our home, we found out a little over one week before closing that our broker had done nothing to secure our loan. No assessment was done, nothing. We found a different broker who pushed everything through in time for closing. I didn't work in the mortgage industry then, or I would have known that the broker I went with was not reputable.

    M.
     
  11. sds

    sds New Member

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    our situation is a bit complicated, we are a biracial couple and my husband and his family generally only do business with other members of their community (ethnicity wise) and this is why we are using the broker/lender we are using. i think it's world savings bank (the lender). we had to put down 25% to qualify for this particular loan, it is somewhat unconventional. we are still taking out a jumbo loan even with the 25% down. I got a 30 year fixed from USAA on our current townhome and wanted to do that again, but that's not the way it went for us.

    I just want to make sure that the house will retain value (relatively and within the current market, obviously) regardless of the fact that it is so close to a shopping area. A red flag went up in my eyes when they said they would only finance a maximum amount *because* it is near the shopping center. I had never heard of that, but then again, I know little to nothing about home appraisal.
     
  12. Homer Simpson

    Homer Simpson New Member

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  13. hberg

    hberg give me some of your tots

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    quite frankly I am not sure what bi-racial has to do with anything? You should shop your business wherever you get the best value - period.

     
  14. Mearen

    Mearen New Member

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    That's a pretty racist attitude to take and one that seems to be costing you money. Time to rethink that policy.
     
  15. sds

    sds New Member

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    i don't feel my honesty is grounds for you to bash me. you obviously do not understand and this is certainly not a thread to debate cultural politics. the fact that his culture is different from mine has *everything* to do with this. there are certain aspects of his culture which are great, but some are bad, this happens to be a bad one. his family does not shop around for the best deal, they keep everything "in the family" and that's just the way it goes, period. if i were acting alone, of course i'd shop for the best value, however, i am married so these things become joint decisions.

    say what you will, think what you will, disagree with it, fine (i do all the time). but unless you've been in a similar situation or are from a culture with similar ideals, you *really* don't know what you're talking about.

    so please, leave the negative and ignorant comments out of this post. i just wanted info about shopping center vs home value, that's all. and thank you to everyone who provided constructive advice.
     
  16. Dwarflord

    Dwarflord New Member

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    In addition, World Savings Bank does not offer Conforming or Jumbo 30 year FIXED loans. I had a loan from world savings in 1999 on my home and could not wait to get out of it. World savings only offers loans where they provide the money to lend based on COSI (COst of savings index). This means that as the savings rate changes, so will the interest applied to your loan, but not necessarily your payment (at a maximum of 12 months), but your payment will eventually change by the 13th month at the very latest.
    Example:
    Say the COSI is 1.25%, they add their "margin" of 2.75%. Now your interest rate at time of closing is 4% - looks good now. The following year, the COSI goes up because times are good. Now the COSI is 4%, which equates to a 6.75% -now its not so good because not only does your payment change, but you could have had a loan at a 30yr /fixed rate at 6% or less
    http://www.monstermoving.monster.co...ype=1&numberOfPoints=2&CompanyID=&radSort=APR
    ........This is the tip of the iceberg because their loans offer a "no-equity" builder option to where you only "have" to pay the interest if that is what you want to pay. 2nd mortgage companies do not like this and you will have great great difficulty if you ever opt to get or refinance a 2nd mortgage, irregardless of the equity of your home. I have been through all of this and I will never go with world savings because of the type of loans they offer. Keep in mind, this was all that they offered back in 1999. To date, I have not heard of this changing.
    Obviously there are many other factors involved with the loan package they offer and I have not talked about all of them, I more or less, pointed out things they did not tell me about prior to closing that I think you should be aware of. Be careful w/these guys. They are legit, but read all the fine print here and make sure this is really what you want.
    I feel that basing your choice of lender purely on race/friendship, may not be a good choice and may cost you tens of thousands of dollars in interest that is unneccessary to spend.
    But good luck, I dont envy you. I hate buying houses. Everyone gets a piece of the pie and no matter how much homework you do or micro-managing, you always feel shafted when all the paperwork is signed and you're walking out of the office.....:D

    DwArFlOrD
     
  17. sds

    sds New Member

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    i hear ya, dwarf. i don't need convincing that this loan is not ideal. i've thought this company was shady all over the place from the get go (and i've pleaded my case over and over to no avail). not much i can do, i told my husband all the warning signs, the broker *promised* (haha, yeah, not in writing) us that our payments would not go over X amount (worst case scenario) ever... (and can i say that worst case amount was only $200 more than the initial payment at 4.235%) uh huh, and i don't buy it at an 11% loan duration cap. but yeah, it's an ARM and the rates will change every year. it's not a negative amortization loan, so i'm not too worried in that regard, if it comes down to it, we'll refinance in a year and i can tell my husband "i told you so!" ;) will the interest rates be this good a year from not? not freakin likely, but not much i can do about that.

    on a more related topic, i talked to USAA about the shopping center/house value thing and they said "i've never heard of such a thing, it shouldn't be negative"
     
  18. Carol Al-Ajroush

    Carol Al-Ajroush New Member

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    I just asked my neighbor, a realtor, about the initial query. She said she has never heard of where the amount loaned is impacted because it is near a shopping center. Per my neighbor, homes near to a shopping center are typically increased in value and more attractive because of the convenience.

    Good luck!
     
  19. sds

    sds New Member

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    thanks, carol, i'm feeling better about this now, i've heard nothing but good news about it besides from my lender. i love this house and i'm excited to move!
     
  20. hberg

    hberg give me some of your tots

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    I sure hope this comment is not directed at me....

     

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