Daley Ponderings

How exciting! I know exactly where this is. I grew up in West Deer and used to drive 908 Ex. to get to my friend's house all the time. Looks really nice and like you will have alot of outdoor space!

Try this view in virtual earth - you can rotate around it as well.

Yes, I didn't think of that link - the real estate site has the bird's eye view which is quite nice, and works more often than Google's street view.

Note that when you type in the address, you end up at the wrong house (about a mile southwest or so)

I have been talking to mortgage guys over the last couple of days. It looks like they aren't going to give us a mortgage, due to not enough income. But, that is only because they are looking at my part-time self-employment for the last couple of years (tax return, schedule C exclusively), and don't care about what I am currently making, so they say I only make $1600/month, which means the house payment is somewhere around 45 percent.

The ironic thing is that if we wait a couple years for the tax returns to show my current income, we'll likely have saved up enough to buy the house for cash, but yet they don't think I make enough to pay it off in 30 years.

One strange thing is that none of them seem to count our current house at all, either by way of a monthly rental property, nor an asset which could be sold and pay off the entire loan.

I wonder if we could get a home equity loan on this house? I don't know all of the right terms.

Some of the lenders think they might be able to do a "stated income" loan, though those types of loans are less common than they used to be, since apparently that is what other folks did - told the mortgage company they made X dollars, when they really didn't, and so couldn't afford the mortgage payments. One guy said he could find a stated income lender, but he said he wouldn't be 100% sure that the company would still be in business when the closing date came.

I bet you could get a home equity loan on the current house. Perhaps you could also get a smaller mortgage on the new house, however much they think you could afford on $1600/month. It would be worth doing both because the mortgage on the new house would probably have a better rate than the home equity loan.

Also, you're probably right about the "stated income" (aka "no documentation") loan; those were popular before the bubble burst, but are probably scarce now.

Our original loan guy (Wells Fargo) who had disappeared for a couple weeks just called today (I called him today to see what was going on).

He said the problem is that we don't have any credit, other than our electric bill. Apparently, our couple credit cards don't show up on his report because we don't carry a balance. And since our car was bought for cash, and we paid off the house last year, nothing shows up on the credit report. So, it is the same as mom, whose car insurance company told her that her premium wasn't as low as it could because there isn't a record of a car payment in the last four years (clearly high-risk behavior).

But, anyway, I got him to try actually putting in my income (though the other lenders have not gotten anywhere with that - this guy is probably a little more committed, since he was a referral from our real estate agent), and he just put in last year's self-employment income, rather than the last two years' income like most folks have been doing. That increases the monthly income a little, and apparently, high enough for the computer to accept it!

He put it a higher down-payment (32%) than we were originally planning on, and some sort of trickery with having a higher asking price, but then the seller pays the closing costs (apparently limited to 6% of the purchase price). But, that is alright, though once we get a for-real selling price, I'll ask about reducing the down-payment a little, though our estimates of work that we are going to do immediately, before moving in is less than we were expecting, so a higher down-payment is alright.

Before I get off on a rant, let me recommend that you find a lender who does non-fico lending meaning that they actually look at your finances instead of doing it by number (lending for dummies). Hard to find, but they do exist.

Little ticks me off more than current lending practices. Forget for a moment the insanity of mortgage lending. How the hell do we let 3 corporations determine who can have access to capital, and on the basis of how much debt you already incur. One's FICO score is *not* one's ability to pay. It's one's history of making banks money. I mean I'm used to hearing about people who don't have credit cards having a hard time with mortgages, but I can't believe you can have trouble despite having 2 credit cards, paying a current mortgage and paying electric on time. Think about what it means if the only people who have access to mortgages and investment capital are people who 1) Work for big companies and 2) generally stay in a moderate amount of debt. Then think about whether we should view high house prices as a good thing. Should we bail out people who lied on their mortgage apps or people with high FICO's who in fact couldn't really afford to pay (well really their lenders), all so that we can keep housing prices high? All so that we can continue to allow financial institutions to maintain a strong bias in favor of big corporate employees and people who willingly borrow instead of save?

The way I see it, not only are major institutions interfering with Christian families' ability to rear children with real education and values (see California or the Daley's personal life). They also attack the family/citizen economically through the banking system. I would just encourage ya'll to think about rhis.

In defense of the FICO score, it does show whether you have previously had trouble paying bills, right? That is only partially correlated to making banks money, since if you are behind on payments, you have to pay all of the finance charges, which I assume is where the credit card companies make the majority of their money.

I have wondered in the past about whether credit card companies like folks who always pay off their bills, or if they would rather have people who pay the finance charges (ie. don't declare bankruptcy or something), and continue to use the card.

It is strange that lenders/insurance companies/etc prefer to see people carrying a balance on a credit card, or other debts. I wonder if it simply a statistical average sort of thing, that the average customer they have holds XX dollars of debt, and so if you either have 0 or XXX (more X's) dollars, you are in the fringe, and so therefore suspicious.

I definitely don't think the government should bail out folks if they signed up for mortgages they couldn't afford, but I suppose that is more from a government should stay out of pretty much all affairs of individuals. I do agree that lenders give people too much money, and so if people believe they should get whatever loan the mortgage company says they can afford, the blame is at least partially on the mortgage company, but perhaps it will help the people in the future to consider their own finances more carefully.

Watching coworkers at my last company, it was interesting to see the shift from almost everyone eating out every day when I got there six years ago, to most people only eating out once at most per week when I left. A couple people turned around their spending during that time, and started to get smaller balances on their credit cards, rather than simply continually growing. I still couldn't convince people that they didn't need to be living paycheck to paycheck on their huge incomes.

I do understand part of the mortgage company's reluctance to give us money, though it seems like they could look at the direct deposit statements from my one client who has a significant monthly payment, even if I didn't have a tax return from last year. Money will be tighter by buying this house, and so it is good to have to consider it more seriously. Of course, they don't consider charitable giving, which would result in more money for a mortgage if we didn't give to various people.

By the way, "Phil" (who I am now definitely sure isn't my dad - I wasn't sure during the political discussion) mentioned about discriminating against employees who don't work for "big" companies. That isn't quite true. If you get a paycheck (defined as a check that has taxes taken out), that would count as provable income. One lender asked if I gave myself a salary, as that would then be enough proof of income.

As for California, yes, I think that them deciding that homeschooling is illegal is pretty poor. Strangely enough, they quoted a court decision from a case in New Hampshire in 1920 saying that children had to be educated in a "school" and not at home, which was interesting, since NH has "always" had homeschoolers around, so I am somewhat interested in what the details of that case are, since it seems like it is probably being used out of context or something.

Well - the owners weren't impressed with our offer, and thought it was so low that it wasn't worth responding. They also mentioned something about someone else possibly putting in an offer.

Whether that was a bluff or not, I don't know, but we aren't interested in the house so much so that we are interested in bidding higher. There is a bunch of work to do on it, and the monthly payments would be higher than I would like.

So, we are waiting for now.

Patience is a good thing. It's so useful, whenever negotiating for anything, not to want it desperately. It was rude of them not to respond, but maybe they'll come around after a while. Unless their other buyer does come through, in which case...onward!