Hi Marys,

I'm fuzzy about mortgages (fuzzier than I should be for sure) but it seems there are a lot of fees, points and insurance fees involved.

All such fees are for the myriad of legal processes and diligence required for that degree of risk on that size of a loan related to real property.

If one had a pretty significant chunk of a down payment but was short say 50,000 on a 200,000 house - is there anyway to secure a "regular" loan?

What do you mean by "regular"?

If you mean NOT secured by real estate, the answer would be;
Maybe... if you otherwise have a strong enough credit history.

Possibly a truly stupid question i don't know. I know most loans require some sort of collateral whether a mortgage or a loan.

Not at all... you can get cash-advances on your credit cards, and signature (personal) loans from your checking bank without any collateral at all.

But if your buying a house with a down payment that results in significant instant equity, why can 't that be collateral for a loan?

It can be, and is used to collateralize home loans all the time. Realize, however, that you are once again asking the bank to now link your real estate back into the transaction, which pulls back into play all the legal process & diligence once again, and all the related fees to pay for all the related service providers.

Your cheapest borrowed money is the funds you pay "all those fees for" in relation to your mortgage... simply because the lender has the greatest and most secure collateral in place to guarantee their principal.

Hope that helps in the clarification.

Cheers,
Dave Donhoff
Strategic Equity & Mortgage Planner

The great majority of "those fees" are BS, pure palm-greasing for the loan bank, appraiser, title company, RE agent, yada yada.

I thought that it was a serious red flag, and counted strongly against you, when buying a home, if you had borrowed the downpayment. Maybe it's a state thing, but I know they always ask you where and how you got your downpayment, and it's not supposed to be borrowed.

If one had a pretty significant chunk of a down payment but was short say 50,000 on a 200,000 house

Are you sure that is what you meant to say...short $50K on the downpayment on a 200K house? Just how much were you wanting/needing to put down for a down payment anyway.

Is it even necessary to put down 25% (assuming you have no other money for the down payment? I have to admit, I am not up on 'financing and the requirements in the different parts of the country, as I know they vary greatly.

My 'guess' is that maybe you are just wanting to borrow $50 and that would be all that was owed against the house.

What am I not understanding here?

Sue

Maybe I'm reading something into this that isn't there... a mortgage is a loan. Even in today's market, there shouldn't be too much problem securing a conventional 30 year loan from a reputable lender if (1) your income to debt ratio is in the acceptable range and your job indicates you're a good candidate to keep up with the payments; (2)you have perhaps a 20% downpayment available - ie 40k on a $200,000 house; and (3)your credit history is decent, payments made on time, etc. etc. I'm sure there are more I'm overlooking, but it's been a while now since I was buying and/or selling houses.

I do remember getting nickled and dimed to death with really off the wall things as dadoes mentioned; and unfortunately, those are just part and parcel of the process.

Whoops sorry, I do mean only 50,000 short on a 200,000 house. I guess why I'm asking is, is there a way to avoid a mortgage if the loan amount is "relatively" small. I find mortgages incredibly complicated. Complicated to the point I think they do it on purposes, its too easy to not understand what's going on and then on top of that are all the fees, points, closing costs.
I know I can get one, I just don't want one.

You might check with a credit union. I belong to one and years ago they had a special where one could apply for a home equity line of credit, with no fees associated with the application/ loan whatsoever. They came out and did a full appraisal at no cost to me. If/when I need any or all of the approved amount I can write a check for the $$.

At the time I think they would approve the loan amount for 80% of the appraised value.

Sue

Here is a link that might be useful: Locate a Credit Union

I know you can get a home equity loan if you own a house.
But can you get one (or some other type) to help buy a house?

"home equity loan" is just another word for "second mortgage". (like "preowned vehicle" equals "used car")

If you want to use the equity in a house as collateral for a loan, the bank will want to be assured that you have clear legal title to the house, that you have the house properly insured, that the house is worth at least as much as the loan. (actually, same for any loan backed by collateral; they make you get car insurance and hang on to the title until your car loan's paid off too). It's usually easier the second time because you've already gotten everything you need (title search, title insurance, homeowner's insurance, appraisal) when you bought the home and got the first mortgage, so you don't need to do it all over again (except the appraisal) just provide the bank the information of what you did before. So, Dave can correct me if I'm wrong, no you could not get a "home equity loan" with less paperwork and lower fees than a "mortgage" while buying a house-- because they are in reality the same thing. You could possibly if your income and credit are good enough get a personal loan not backed by collateral but the interest rates would be significantly higher than a mortgage because if you don't pay the bank just eats it doesn't get to take your house.

A lot of the things they want (the ones i mentioned up there, title search, homeowners insurance) are things you need anyway to protect *your own interests* when you buy the house. You do not want to buy a house unless the people you're buying it from have clear legal title, which is what a title search is for, for example. You want to insure your house whether or not the bank tells you you have to, right? yes, there are also a fair amount of stupid piddly stuff ("document processing fees" etc) but if I had to guess I bet the banks that tack those on to mortgages tack them on to *all* their loans so getting a different type of loan isn't going to save you from those. I don't think. This is where choosing your bank or credit union or whatever-- comparison shopping-- might come in handy, but I doubt you can avoid them by getting a not-mortgage loan. (although maybe i'm wrong, i've only ever had student loans and mortgage and the student loans were pretty much by the rules of the fed loan program)

Points can be confusing and all the different types of mortgages available can be confusing but they also give you options. If you want to give up options in favor of simplicity then just get a conventional mortgage with no points. While that may or may not be the absolute best possible mortgage you can get in your specific situation, it is as simple as you can get in any kind of loan. The bank gives you X amount of money at Y interest rate and you pay it off in equal installments over Z months; this is the same deal you'd get, say, if you took out a student loan to pay for college.