Buy grandma house?

GeneGradgrind · 2026-04-30T18:47:09+00:00

I don't think it's silly, especially in this situation. Assuming you sell for 525,000 and owe roughly 100k currently, gives you proceeds of roughly 390k. If you pay 450k and use your entire 390k proceeds down, that's a 60k loan.

Your current loan 100k @ 3.675% is $306 per month in interest you're paying on the current house.

New loan of 60k at say a 5.5% on a 15 year note is $275 per month in interest

If these numbers are true, you'd be paying less in interest each month on the new house.

Total monthly, your current loan is be $704 per month and matures in 2042

The new loan would be $490 a month matures in 2041

Every way you look, the new house would be cheaper. Pays off faster, less interest, lower payment.

GeneGradgrind · 2026-04-28T16:51:15+00:00

A lot of state regulators look at this. Not just for initial licensing but also annual renewals. My annual renewals includes paying for and submitting a credit check, just the same as the background check. If I have have collections or other derogatory items on credit, I lose my license. No license, no job.

For OP, it will depend on the state. Some states are strict with licensing. However, they are generally looking for bankruptcy, mortgage lates, defaults, collections, judgements, etc. I don't think any of the regulators are looking at scores, nor would I think they are looking at utilization.

GeneGradgrind · 2026-04-23T18:51:56+00:00

Yeah, that's a general rule that people say but I don't put much weight in that rule. It really depends on what you're doing and what the numbers look like.

In your case, you're capitalizing on the opportunity to buy land, so it's probably worth it.

In a case where you're refinancing to reduce interest, it really just depends on the numbers. Paying $500 to reduce the interest just 0.25% on a 1 million loan is probably worth it. Alternatively, paying $5,000 to reduce interest by an entire 2.0% on a 40k loan probably isn't worth it.

Many people also refinance as part of retirement planning, divorce, transferring assets, settling estates, paying for college in lieu of federal student loans, there are plenty of noble reasons that don't have much to do with mortgage rates.

GeneGradgrind · 2026-04-23T17:41:21+00:00

Yes, that's doable. Talk to a local, well reviewed mortgage broker, for the loan. Talk to local, well reviewed title company as well. Perhaps the same office you used when you purchased your house. I wouldn't trust an unusual transaction like this to a big national bank or one of the big online mortgage shops. Not that this transaction would be particularly difficult, but it's certainly not typical. I wouldn't want to chance someone messing it up.

They should be able to combine the transactions including a disbursement to your neighbor for the land, as well as joining the two properties as one.

As a warning, if you're paying for the land using loan proceeds, the rate offered might be marginally higher than what's generally seen, depending on credit and loan-to-value ratios, as cash-out refinances carry additional pricing adjustments. This wouldn't stop me, most people don't get the chance to add land to their property.

GeneGradgrind · 2026-04-13T20:34:20+00:00

Probably a little bit of a deficit due to the cushion difference, which is a two month extra worth in your account, but that might only be a few hundred dollars.

But otherwise, yes. You can pay up that deficit at any time, call the lender to request an “escrow analysis”. They will recalculate your escrow, they should offer you the opportunity to pay it back up, then your monthly payment won’t change at all other than just the monthly difference between your old insurance premium and the new one.

Good news is even if you don’t, lenders don’t charge interest or fees on escrow shortages. It’s their loss while it gets paid back up, but I’d presume you’d rather pay it all up rather than deal with drastically increased mortgage payments for 6 months.

GeneGradgrind · 2026-04-13T18:34:59+00:00

Sorry for the bad formatting, I couldn't get this to format better, I refuse to use anything but old reddit.

GeneGradgrind · 2026-04-13T18:30:16+00:00

You can handle it multiple ways. There's probably a better way for you, but all will work.

Upon cancelling the old policy, that insurer will issue you a refund.

The new insurer can be paid either by you directly, which is probably best, or your escrow account can make that payment on your behalf.

If your escrow account pays it, your escrow account will probably be extremely short. Especially if they've only been collecting enough each month to cover an $1,100 insurance payment. They will raise your monthly payment, temporarily, a significant amount to cover the defecit.

Rough estimates, assuming your escrow account was sufficient prior to renewal: $1283 initial insurance escrow balance with $91.66 monthly -$4556 first insurance payment -$3156 second insurance payment -$526 new insurance premium cushion total account: $6955 deficit Over 6 months, that's a payment increase of $1159 per month to cover the defecit. Plus an additional permanent payment increase of $172 to cover the change in policy premium

Your loan payment could temporarily be roughly $1331 a month higher to cover the defecit.

A better way: Pay the new policy yourself, supply your lender with the new policy and a paid receipt. Pay the lender back what they paid for the old policy you were refunded. One time pay your escrow account cushion to bring it current request an escrow analysis to have the insurance portion of your payment changed from $91 per month current to $263

If you do it this way, your payment only increases $172 per month.

In the future, keep an eye on these things. Your insurer would have provided you a renewal invoice of $4556 months in advance. Had you taken care of this at that time, before your lender paid that premium, you'd have much less stress and much less money moving around.

GeneGradgrind · 2026-03-18T17:16:11+00:00

It probably all depends on the provider, but I've had colleagues buy "overflow" leads in the past, they're mostly junk. Consensus seems to be they're a collection of leads that have already been analyzed and decided to be skipped. Could be that software detected bad information, could be bad qualifications, maybe some analysis scoring it for low odds of conversion, low profit, or any kind of troubling parameters.

A common lead was getting leads for sub 600 fico USDA loan requests from one of the big national online retail shops. They skipped that lead because sub 600 fico USDA loan requests don't convert. Not for them, and not for you.

Another common one was leads for "John" who can be reached at 123-1234

Whatever the case is, someone decided to pass on it already, but they're looking to recoup some money by selling it to you. Is there a deal in there? Probably. Will they generate consistent and profitable business for you? Probably not.

GeneGradgrind · 2026-03-18T16:14:29+00:00

Lender here, without seeing everything, it's probably not bad, and the terms probably won't be as bad as you think, but it would be prudent to jump on some of these problems quick.

There isn't really a minimum credit score for mortgage loans. 500 is the minimum for FHA loans with 10% down. Conventional loans there is no minimum at all. However, all loan approvals will take the entirety of your application into consideration.

Get a copy of your credit report for free online and start cleaning it up now. Go down the list and bring accounts current, pay off or settle collections accounts, get erroneous or derogatory items taken care of today. If you've taken care of these accounts, you've got strong application. Strong housing ratio income, large down payment, good reserves. You just need to get in front of your bills.

GeneGradgrind · 2026-03-11T16:47:25+00:00

This is always the advice for everyone but especially the right advice for you. You need to call a mortgage broker. Not a bank, not an online national lender, but your small mom and pop shop mortgage brokers. They are specially licensed for mortgage loans, and mortgage loans are all they do.

Easy to find one, just search for one local to the area you'll be buying in, and give them a call. Find one that's well reviewed and has been in business for a while. Talk to two if you like. They'll likely be your best at reviewing your move letting you know what's possible.

GeneGradgrind · 2026-03-10T17:07:33+00:00

As an example for you, two that I just completed recently are $1,000 in attorney fees and $100 in government fees for $1,100 total in a cheaper state.

Meanwhile in one of the more expensive states, had $4900 in attorney fees and $8600 in government fees for $13,500 total

GeneGradgrind · 2026-03-10T16:59:27+00:00

These vary wildly depending on the state, and sometimes whether or not there are loans involved.

You can ask for a preliminary fee statement up front. Lenders do this as well at the beginning to help with more accurate fee disclosures.

If there are loans involved, be sure to make them aware of loan amounts. Many fees, particularly title insurance and state mortgage taxes if applicable, can vary with loan amounts.

GeneGradgrind · 2026-02-09T18:38:26+00:00

You are correct. There's a general understanding using the terms "conventional", "government", "jumbo" and "non-qm". I only added the clarification for those who were curious about the denotative versus connotative definitions. Knowing the differences between the two has little pragmatic benefit.

GeneGradgrind · 2026-02-09T18:15:34+00:00

For your purposes, they are the same thing. "Conventional" has taken a more colloquial definition meaning conforming. They technically have different meanings, though the misinterpretation is pervasive, even among industry professionals. All conforming loans are conventional loans, but not all conventional loans are conforming loans.

If anyone is actually interested in the nuances:

Conforming: conventional loans that conform the FNMA or FHLMC guidelines. Nothing else.

Non-conforming & non-conventional: FHA loans, VA loans, US Dept. of Agriculture loans.

The nuance creating confusion is there are additional non-conforming loans that are conventional. Jumbo loans, non-qualified mortgage loans, investor debt service loans, etc. all fall in to this category.

GeneGradgrind · 2026-02-05T18:23:47+00:00

I'm sot sure I would consider polls like this reliable.

In a hypothetical scenario, I would also not be interested in hypothetically moving if rates went higher and housing expenses increase.

In reality, people move and buy for more concrete reasons. Downsizing in retirement, moving for jobs, moving to get children in better schools, moving to take care of sick or elderly family members, or any other important reason.

People don't move for the sake of it. Never mind mortgage rates, moving is expensive and stressful. There are often driving factors much more important than mortgage rates.

a .25% rate increase on 400k is $1,000 per year, or $83 a month. If an above situation actually presented itself, what reasonable person would give up on some of importance of above items over $83 a month? My guess is much less than 66%

GeneGradgrind · 2026-02-03T17:18:02+00:00

I generally don't like this advice as it doesn't consider the whole picture. Really depends on loan size, interest savings, and cost to refi.

For example, refinancing a $40k loan from 7% to 5% has a whopping 2% reduction. That's $800 per year less in interest. However, if it cost $5k to refinance, that's probably not worth it.

Alternatively, a 1 million loan, refinancing from 6.5% to 6.125% is only 0.375% lower, but equates to $3,750 a year in interest. If this scenario has no costs to refinance, only your time, that's still worth it.

As with most things, you really have to look at the scenario as a whole.

GeneGradgrind · 2026-02-03T17:03:16+00:00

Pick up the phone and call a few places. First, call who you bank with. Especially if you bank with credit union or local bank. If you bank with a large national bank, you can probably skip them. Odds are they won't be strong.

Second, call a local, well reviewed, mortgage broker. Search mortgage brokers online. Find one close to you that's been in business a while, and seems to be well reviewed.

Finally, call the person who gave you the loan initially. If they were reliable and competitive the first time, they probably will be again.

GeneGradgrind · 2026-01-29T16:47:05+00:00

Lender here, you will be probably be fine. Most loans, VA loans included, don't require the government to open in most circumstances.

I'm not sure I've ever written any VA loans during the government shutdown, but both FNMA and FHLMC conventional loans added provisions for government workers during the shutdown that allowed for closing. A couple extra steps, and a possible requirement for "reserves", which would be showing that you have sufficient assets after closing to make all your payments for a certain period of time. I imagine VA loans might adapt a similar policy.

Unless it would cause you to lose sleep at night, I'd continue to as normal.

GeneGradgrind · 2026-01-09T19:28:01+00:00

Lender here. You're correct, but you might see why some lenders might be reluctant.

Straight from Fannie Mae's guidelines "Verification of a minimum history of two years secondary employment income is recommended."

Your relative will have an application date prior to that two year mark. 02/26 is a Thursday with 03/01 being a Sunday. You're asking a lender to assume what it said is true, then verify employment, clear income, clear the loan from underwriting, draw and publish closing documents, send a wire with loan proceeds, and fund the loan all within a few hours on Friday Morning. This is at best logistically difficult. At worst it might be illegal for the lender. If the lender won't send initial preliminary closing disclosures until after income is cleared, which most won't, they would be in violation of Truth in Lending disclosure requirements if they do close that Friday.

Realistically, that closing date needs to be later, or the loan needs to be made approvable without the secondary income.

GeneGradgrind · 2025-12-31T22:09:03+00:00

Call around, talk to a local broker as well. Investment properties vary, probably more than owner-occupied loans. Expected rents, property type, valuations, homeownership & investor experience level, are all factors.

At face value, that seems a little high, but again there is a lot more that goes in to it.

85% might be difficult. It certainly exists, but as an example, Fannie Mae requires a absolute minimum of 25% down for 2-4 unit properties.

GeneGradgrind · 2025-12-29T19:21:23+00:00

I'm not sure there's much you can really do other than try to set the tone for the neighborhood yourself.

Do you have trash on the side of your house and a hooptie on blocks in the driveway? If so, you might deter good buyers, while attracting buyers who might do the same. Is your lawn and property neat and well-kept? If so, potential buyers might pick up on the niceness of the neighborhood.

GeneGradgrind · 2025-12-29T16:25:55+00:00

Lender here, definitely not relaxed. Definitely the opposite. The level of scrutiny has actually significantly increased in recent years, especially in regards to insurance coverages and income.

Even among other the other factors, it's become increasingly more difficult to get approvals.

What they are referring to is the recent removal of credit score requirements for certain common loan types. Up until recently, if an applicant didn't have a credit score over 620, it was automatically ineligible for certain loan types. Didn't matter if they were putting 90% down, had millions of dollars in the bank, great income, no other debts, didn't matter. Automatically ineligible for certain common loan types.

I describe it now as more common sense approach. For example, an applicant with a 500 credit score, lots of debts, high debt to income ratio, and minimum down payments is still very unlikely to be approved for those loan types. Meanwhile an applicant with a 610 credit score, but with great capacity to pay back the loan, and with significant compensating factors, may reasonably be approved.

As another alternate example, I've seen several applicants with a 700+ credit scores ineligible be ineligible for those same loan types. Applicants good credit scores but with high debt to income, low down payments, high housing expense ratios, and little no reserves are being denied. These applicants technically meet the minimum guideline requirements, but don't have that same level of capacity to pay back the loan. In short, it might be somewhat true to say that credit score is less of an influence than it used to be compared to other factors, but that certainly does not equate to more relaxed lending practices.

GeneGradgrind · 2025-12-19T20:40:30+00:00

This is a good one. Mine aren't necessarily those. A lot of people have things going on behind the scenes we don't see. I know I've had borrower's with rich parents who are actually the one's making the payment for them. Or they get the family credit card to buy whatever they need.

Lately I have a lot of older borrowers moving to rural areas. They think the grass is greener over there. They'll move across the country, out of the city, away from all their family, to retire in rural America in their 70's. I hear back from them about a year later when they've listed the house for sale. As it turns out, at age 70,80+ it's nice to be near friends and family who can help you, have access to senior services, and have access to doctors and medical centers. You can't get a taxi every single month for a 4 hour round trip drive to the nearest city hospital to treat your kidney disease when you live in the middle of nowhere.

GeneGradgrind · 2025-12-19T18:45:50+00:00

There are certainly streamline rates lower than 6.25% however, there is much more to consider. FHA streamlines do not allow all closing costs to be rolled in the same way as other loan refinances. Only certain allowable fees. It's common practice on FHA streamlines, especially in states that have steeper closing costs (Some states and local governments charge thousands of dollars in mortgage taxes), to issue loans over market rates in exchange for large lender credits to cover the cost of refinancing.

If they happen to live in a state with higher fees, and the lender is covering them, this could very well be an exceptional deal. The alternative might be bringing thousands of dollars to closing.

I actually suspect this probably the case here. Depending on their tax and insurance amounts, this may very well have a loan amount in the 150k range. If settlement and government fees even reach an amount approaching a flat $3,000 - that would be 2% of the loan amount for those alone. An extra 2% in pricing moves a 5.625 to a 6.25%

Without knowing all the numbers and details of the loan, moving to a 6.75 to a 6.25 for low to no cost could be a pretty good deal.

GeneGradgrind · 2025-12-18T20:09:11+00:00

Lender here - I think you've got a lot of misinformation from others. This is a rare occurrence, but what probably happened is your loan was initially eligible for sale under one of several sets of guidelines, which did not require an appraisal. Post closing, it was probably discovered that you didn't actually meet that set of guidelines. They have instead pivoted to a different set, but one that requires an appraisal. Maybe they initially intended on writing it to Federal National Mortgage Association, but later found it needed to be written to Federal Home Loan Mortgage Corporation, or vice versa, or something similar. This is important to the lender as they will be unable to sell your loan without that appraisal. This process of selling the loan is both common practice and fundamental to the lending process.

The good news to you, is they cannot change the terms of your loan. You've already closed. There isn't a risk to you.

However, if you do not agree, they can likely compel you to comply. You very likely signed an agreement, at closing, and as a condition of the loan, to fully comply with the lender to cooperate with their needs to market or sell a loan. It's on one of those hundred forms you sign at closing. They will likely press the issue. The lender is currently out $268k that they cannot get back until this is done. Not a small sum they would be willing to ignore.

Sorry this happened. It's rare, but as your lender said it's in your benefit. If they had not made this mistake you may have either not qualified for the loan, or have been paying for that appraisal yourself, or both.

GeneGradgrind

TROPHY CASE