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I have a question particularly directed at those in the lending business, but also at anyone who has any relevant information.
I am probably looking at buying a home in the $350-400k range. I plan to put $200k+ down. I have no other debt, and my credit is good (don't know the number as I haven't run a credit check, but have used consumer credit regularly and never had any issues). The income is what gets tricky. I can only document $2500/month right now for the purposes of securing a standard mortgage that can be sold in the secondary market. Nonetheless, I will earn over $6,000 this month and over $70,000 this year. Come October, I will be able to document almost $12,000/month. (To clarify, I can document all of this, but I can't "document" anything except the $2500 right now.)
My problem is that there are a number of personal factors (I'd rather not elaborate) that make waiting until October (when I would have absolutely no problem with financing) very inconvenient.
So after Dodd-Frank, what is the best option for me? With a loan-to-equity ratio so low and no other debt, what is the highest top ratio that I could get on that $2500/month in a standard mortgage (with no other debt)?
I have spoken to several lenders about private bank loans as well (that would not be sold into the secondary market), but I want to know how hard of a bargain I can drive with them. Frankly, this is a nearly risk-free loan, especially if I structured it as a short-term (one-year?) loan with a balloon payment and planned to refinance it as a standard 15- or 30-year fixed. I don't have any problem doing a bank loan, but I don't really want to pay 5.5% interest and pay origination fees and closing costs on two loans within the next year. And I feel like I ought to be able to negotiate something better than that.
Last edited by southernsmoke; 01-13-2012 at 02:20 AM..
I have a question particularly directed at those in the lending business, but also at anyone who has any relevant information.
I am probably looking at buying a home in the $350-400k range. I plan to put $200k+ down. I have no other debt, and my credit is good (don't know the number as I haven't run a credit check, but have used consumer credit regularly and never had any issues). The income is what gets tricky. I can only document $2500/month right now for the purposes of securing a standard mortgage that can be sold in the secondary market. Nonetheless, I will earn over $6,000 this month and over $70,000 this year. Come October, I will be able to document almost $12,000/month. (To clarify, I can document all of this, but I can't "document" anything except the $2500 right now.)
My problem is that there are a number of personal factors (I'd rather not elaborate) that make waiting until October (when I would have absolutely no problem with financing) very inconvenient.
So after Dodd-Frank, what is the best option for me? With a loan-to-equity ratio so low and no other debt, what is the highest top ratio that I could get on that $2500/month in a standard mortgage (with no other debt)?
I have spoken to several lenders about private bank loans as well (that would not be sold into the secondary market), but I want to know how hard of a bargain I can drive with them. Frankly, this is a nearly risk-free loan, especially if I structured it as a short-term (one-year?) loan with a balloon payment and planned to refinance it as a standard 15- or 30-year fixed. I don't have any problem doing a bank loan, but I don't really want to pay 5.5% interest and pay origination fees and closing costs on two loans within the next year. And I feel like I ought to be able to negotiate something better than that.
Convenience can cost you. If you can't wait until Oct 1, then I don't see any options other than the bank loan that will require double closings and the associated additioanal costs. 5.5% seems reasonable for an interest rate. The thing I would try to "negotiate" would be to pay an origination fee on the bank loan with the condition that you will do the end loan with them if they waive the origination fee on that one.
Trust me, having been involved with multiple lenders /banks the odds of even the MOST reasonable / responsive type "loan officier" with the rare authority to override the computerized proceedures that ALL institutions must follow will have nearly NOTHING to negotiate on other than, as Tim suggests, the promise that they'll try to allow you to do the "next loan" for low / no fees.
Even though to you this appears to be "low risk" that is NOT how lenders think these days. ANYTHING that does not fill out all the little boxes on the computer ends up getting rejected.
I imagine that there are some banks that will be a litttle more polite / friendly, but essentially all of 'em arre gonna say "If you want a loan based on a $70k/yr income you gotta show us the paycheck stubs to prove it, so come back as soon as you can. Can I give you a free stress ball with my web site on it?".
There is just no appetite for any exposure to portfolio loans right now. Everyone knows that WHEN the nextt crisis from the Euro hits or some nut job terrorist crashes onto Wall Street or the White House dares Congress to smash the piggy bank or who-knows-what happens that could be a GIANT lights out for a whole lot of investors and whole lot of borrowers will not be able to pay back even their super low interst rate loans and that is why these loans get sold on the secondary market and not left to fester on the lenders balance sheet....
First of all, thank you for the responses. I kind of thought that might be the best I could do if I want to borrow more than I qualify for with a conventional mortgage.
Quote:
Originally Posted by chet everett
Trust me, having been involved with multiple lenders /banks the odds of even the MOST reasonable / responsive type "loan officier" with the rare authority to override the computerized proceedures that ALL institutions must follow will have nearly NOTHING to negotiate on other than, as Tim suggests, the promise that they'll try to allow you to do the "next loan" for low / no fees.
Even though to you this appears to be "low risk" that is NOT how lenders think these days. ANYTHING that does not fill out all the little boxes on the computer ends up getting rejected.
I imagine that there are some banks that will be a litttle more polite / friendly, but essentially all of 'em arre gonna say "If you want a loan based on a $70k/yr income you gotta show us the paycheck stubs to prove it, so come back as soon as you can. Can I give you a free stress ball with my web site on it?".
There is just no appetite for any exposure to portfolio loans right now. Everyone knows that WHEN the nextt crisis from the Euro hits or some nut job terrorist crashes onto Wall Street or the White House dares Congress to smash the piggy bank or who-knows-what happens that could be a GIANT lights out for a whole lot of investors and whole lot of borrowers will not be able to pay back even their super low interst rate loans and that is why these loans get sold on the secondary market and not left to fester on the lenders balance sheet....
I hear you. The thing is that I can show pay stubs for well over the 2500/month. I mean I know they want history, too, but my whole point is that I can demonstrate that I can service $150k of debt. Plus, what really makes this almost risk-free (as a practical matter) is that even if crazy stuff happened and I did default, the bank would have a $150k lien against a nearly $400k property. In an absolute worst-case scenario (where I inexplicably did not sell the property for a steep discount and repay the bank so that I could salvage at least a little of my investment), they would have some costs associated with the foreclosure, but they would easily be able to satisfy the debt.
At any rate, an associated question remains--for anybody in a position to see a lot of mortgage apps, what kind of monthly payment could I qualify for? (I want to get a sense of what I can expect so that I know if I should keep shopping for a different lender.) 45% back-end ratio?
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