Mortgage Companies

[Guest MormonGator]

5 minutes ago, zil said:

Phew.  Now I shall go ponder how to make you pay for that.  Maybe I'll send you a fountain pen.  Unless you get really addicted, $2,503 is way less than you'll need for ink and paper each month.

:: ahem :: Are you forgetting what you demanded as a gift last month? 

https://www.penporium.com/CARAN-D-ACHE-GOTICA-FOUNTAIN-PEN-p/55.htm

Miss @zil seems to be a bit hypocritical here.

Edited May 22, 2018 by MormonGator

[NeedleinA]

4 minutes ago, zil said:

Maybe I'll send you a fountain pen.

An exploding fountain pen perhaps?

[Lost Boy]

1 hour ago, Jane_Doe said:

She's that out of touch with money?  

Is she ok with "Mr Lost Boy, you worry about the finances and tell me what we can afford.  Don't tell me the details- I don't want to know."?

Pretty much, yes.   The conversation we had the other night went like this.   I told her about how much house I am comfortable buying.  Let's just say it was $300k.  She then comes back and says her friend and her husband whose combine salary is less than half that of my wife's and I just bought a house for $250k, why can't we get one closer to $500k?

So I respond, "Why don't we sit down together tomorrow and go over our current expenses?"

Response...  "No, but I just don't understand why we can't buy more.  Her husband only works 4-5 hours a day waiting tables and you are an engineer."

So I respond, "Well let's look at our expenses tomorrow and decided how much more we can afford."

Nope.

Now to her credit, she doesn't just willy nilly go out and buy expensive things.  Anything that is out of the norm and a big expenditure we talk about before purchasing.  Could we be more frugal with our expenses?  Absolutely.  We only live once and you are only young once.  If you save all your money till you're too old to enjoy it, you will have missed out on life.

[zil]

4 minutes ago, MormonGator said:

:: ahem :: Are you forgetting what you demanded as a gift last month? 

https://www.penporium.com/CARAN-D-ACHE-GOTICA-FOUNTAIN-PEN-p/55.htm

Miss @zil seems to be a bit hypocritical here.

I said that was way less than he'd need for ink and paper - I never mentioned pens.

PS: That pen's kinda ugly.

[Lost Boy]

1 hour ago, MormonGator said:

 You need to be smart, and only get the house you can afford. Your housing payment should be no more than 25% of your income, regardless of what the lender offers you. 

Yeah, after all is said and done, my housing payment with everything will be around 40% at most.  After 25 years of marriage, I have a decent handle on what we spend. 

Actually, I am getting into the slum lording business.  I am keeping the first house and turning it into a rental.  Time to start making some cash on the side.  My parents started doing rentals when they were about 5 years younger than me and now have 8 rental properties that are almost paid off and generate twice my salary...   I would like to get to generating the same as my salary when I retire. 

Then Lost Boy with travel the world with Lost Girl in search of fun and adventure.  She works in the airline industry and when she retires we'll have free flights to many world destinations..  That is the plan..

[Guest MormonGator]

9 minutes ago, zil said:

PS: That pen's kinda ugly.

Ingrate. 

[Lost Boy]

21 minutes ago, e-eye said:

I'm a loan officer.  Yes 50% is pretty common for an approval on your debt to income and in some cases with different loans I see some approvals go to 56% and sometimes beyond .  Lending is not as crazy as it use to be, but the real potential problem is not when a person making 4k a month and spends 2k on a mortgage with little to no savings.  

Most people walked away from their homes because they looked at it as a poor investment and didn't see it as a value to continue paying on their mortgage.  Negative amortization loans blew up on people and things got worse with unemployment was high.  If values drop again you will see a bubble, although I don't perceive it will be as bad, unless the economy implodes and it's worse than what we saw 10 years ago.  If things continue to boom we are more likely to see a larger bust as things can't go up forever.   

I disagree.  Things have essentially gone up for ever.  I mean you get a few drops here and there, but there is always the recovery and things continue to grow.

Real-estate always retains some value even when the economy goes bust.  It is unlikely to be upside down for long if the economy goes south. 

[Just_A_Guy]

7 minutes ago, Lost Boy said:

I disagree.  Things have essentially gone up for ever.  I mean you get a few drops here and there, but there is always the recovery and things continue to grow.

Real-estate always retains some value even when the economy goes bust.  It is unlikely to be upside down for long if the economy goes south. 

That’s true, but could also be said about an S&P 500 index fund.  Local conditions will vary, but my understanding is that real estate is a pretty . . . average investment unless you really know what you’re doing.

(I shouldn’t complain too loudly, since my house is up 50% over what I bought it for in 2012.  But I fully expect it to shed a lot of its value in the next few years as the market corrects itself.)

[mrmarklin]

Typically banks lend 40% of gross less any payments that you have.

Don't forget the possible tax benefits you will receive due to deductions for interest and taxes that you do not currently have available as a renter.  You may be surprised at how much this can save, although in the mid west where you don't have to deal with California pricing this could be marginal.

[Traveler]

2 hours ago, Lost Boy said:

I am in the process of buying a new home.  I am an engineer and know my way around numbers.  So I have thoroughly researched property taxes, insurance, the whole nine yards on areas I am interested in buying.  I also know how much I can afford based on my income and spending patterns.

So I basically sat down with my wife and explained how much home we could afford and why.  She is more of a touchy feely type that doesn't really like to be bothered with the why.  Anyway, I finally decided to get the pre-approval letter from the mortgage company.  The amount they came back with was nearly double what I can comfortably afford.  What-the-heck???

I could very uncomfortably do 50% higher than the amount I presented to my wife, but not double.  I thought the lending industry was supposed to be mostly cleaned up?

Am I nuts?  I have 100% of the time faithfully paid off my credit cards every month since I first got one 30 years ago.   Never been late paying on any loans.  All of my cars are paid for.    I have a good handle on my expenses and there is no way I could do the amount he offered.   

The loan offered would have been about 50% of my income.  That is absolutely insane to me.  The amount I told my wife was much less (that was before I heard from the lender, so it wasn't a lie).  But now do I tell her what the real number is knowing that she really doesn't try to understand our finances?  Or do I just keep mum on it?

 

You (meaning you and your spouse) are looking at this all wrong.  If “you” are as good with numbers as you claim – you should be able to quickly turn this to your advantage and end up allowing someone else to pay your mortgage.   But then if “you” are the type that does not understand simple accounting – meaning increasing output does not matter if increases to input is greater.  If you understand leverage you can use someone else’s money to increase your own – if you do not understand these principles and how to take advantage of them; then the reality is – you should not be borrowing money for anything - ever. 

 

The Traveler

Edited May 22, 2018 by Traveler

[Jane_Doe]

45 minutes ago, Lost Boy said:

Pretty much, yes.   The conversation we had the other night went like this.   I told her about how much house I am comfortable buying.  Let's just say it was $300k.  She then comes back and says her friend and her husband whose combine salary is less than half that of my wife's and I just bought a house for $250k, why can't we get one closer to $500k?

So I respond, "Why don't we sit down together tomorrow and go over our current expenses?"

Response...  "No, but I just don't understand why we can't buy more.  Her husband only works 4-5 hours a day waiting tables and you are an engineer."

So I respond, "Well let's look at our expenses tomorrow and decided how much more we can afford."

Nope.

Now to her credit, she doesn't just willy nilly go out and buy expensive things.  Anything that is out of the norm and a big expenditure we talk about before purchasing.  Could we be more frugal with our expenses?  Absolutely.  We only live once and you are only young once.  If you save all your money till you're too old to enjoy it, you will have missed out on life.

I'm of the philosophy that both spouses should be open and on the same page when it comes to finances.  Now that doesn't mean both spouses have to take equal interest in them or be equally involved in managing them-- it's perfectly okay to have one spouse that's the money manager.  Just as long as you're both on the same page as far as goals and general spending, and any questions can be asked & addressed.   

[Mike]

52 minutes ago, e-eye said:

Most people walked away from their homes because they looked at it as a poor investment and didn't see it as a value to continue paying on their mortgage.  Negative amortization loans blew up on people and things got worse with unemployment was high.  If values drop again you will see a bubble, although I don't perceive it will be as bad, unless the economy implodes and it's worse than what we saw 10 years ago.  If things continue to boom we are more likely to see a larger bust as things can't go up forever.   

My very first home loan was negatively amortized.  That's what made it attractive to get in to, but I could see that the longer I kept that loan the worse off I could potentially become. In Central California at the time my equity rose sufficiently that I made a good profit which enabled me to "buy up" in the Utah market when the nationwide economic crisis effects at the time began to arrive on the West Coast. I was fortunate to find a buyer within a week of putting my house on the market.  A friend in the same Ward and just a couple blocks from me lost his job, found a higher paying one in Logan, UT but couldn't sell his house for another three years--so I got out just ahead of the wave. 

[unixknight]

1 hour ago, Lost Boy said:

I disagree.  Things have essentially gone up for ever.  I mean you get a few drops here and there, but there is always the recovery and things continue to grow.

Real-estate always retains some value even when the economy goes bust.  It is unlikely to be upside down for long if the economy goes south. 

Yeah don't listen to a loan officer.  What does he know?  😎

[unixknight]

43 minutes ago, Traveler said:

 

You (meaning you and your spouse) are looking at this all wrong.  If “you” are as good with numbers as you claim – you should be able to quickly turn this to your advantage and end up allowing someone else to pay your mortgage.   But then if “you” are the type that does not understand simple accounting – meaning increasing output does not matter if increases to input is greater.  If you understand leverage you can use someone else’s money to increase your own – if you do not understand these principles and how to take advantage of them; then the reality is – you should not be borrowing money for anything - ever. 

 

The Traveler

That post would have been a lot more useful with a few specifics.

[Lost Boy]

50 minutes ago, Just_A_Guy said:

That’s true, but could also be said about an S&P 500 index fund.  Local conditions will vary, but my understanding is that real estate is a pretty . . . average investment unless you really know what you’re doing.

(I shouldn’t complain too loudly, since my house is up 50% over what I bought it for in 2012.  But I fully expect it to shed a lot of its value in the next few years as the market corrects itself.)

Real Estate has many vehicles in which to make money.  If you are just buying property and waiting for it to go up in value, you will certainly beat the return on a savings account, but not much more.  But if you want to make money, you need to get into something else.  I am going the way of rental properties.  I should be able to at least do 12% return, which is less than I do in the market.  I average about 18% in the market.  So why not invest that money that I am putting into rentals into the market?  Because it is already in real estate.  I figure I will leave it in real estate.  Diversify a bit.

My parents have done quite well with their real estate investments, probably as well had they put the money in the market.  They can afford to live well in retirement.  They can pay for missions, tuition, etc.  They paid for a family cruise a couple of years back..  37 people on a week long cruise.  Best family reunion ever.  No cooking, no cleaning, just enjoyed each others company.  They say money can't buy happiness, but it certainly can buy memories.

 

[Lost Boy]

36 minutes ago, Mike said:

My very first home loan was negatively amortized.  That's what made it attractive to get in to, but I could see that the longer I kept that loan the worse off I could potentially become. In Central California at the time my equity rose sufficiently that I made a good profit which enabled me to "buy up" in the Utah market when the nationwide economic crisis effects at the time began to arrive on the West Coast. I was fortunate to find a buyer within a week of putting my house on the market.  A friend in the same Ward and just a couple blocks from me lost his job, found a higher paying one in Logan, UT but couldn't sell his house for another three years--so I got out just ahead of the wave. 

I always wanted to meet someone who did a negative amortization loan....  That is a sign of an insane bubble.

[Mike]

3 minutes ago, Lost Boy said:

I always wanted to meet someone who did a negative amortization loan....  That is a sign of an insane bubble.

Desperate times call for desperate measures, hahaha 

Edited May 22, 2018 by Mike

[Lost Boy]

40 minutes ago, Jane_Doe said:

I'm of the philosophy that both spouses should be open and on the same page when it comes to finances.  Now that doesn't mean both spouses have to take equal interest in them or be equally involved in managing them-- it's perfectly okay to have one spouse that's the money manager.  Just as long as you're both on the same page as far as goals and general spending, and any questions can be asked & addressed.   

You know...  So am I.  She does the tithing and I do the taxes.  Our money is in joint accounts and we both have access to it on line.  She knows what I spend.  I know what she spends.  She does have money in an account that I can't access.  but there is a reason for that.  She is not from the U.S. and when she goes home she just spends money from that account.  It usually only has $1k in it or so.  No biggy.

Btw, I ended up telling her the actual number.  But told her I still didn't want to go over  the amount I had suggested.  She agreed.

[Lost Boy]

16 minutes ago, unixknight said:

Yeah don't listen to a loan officer.  What does he know?  😎

He knows how to make money for himself.

[unixknight]

29 minutes ago, Lost Boy said:

He knows how to make money for himself.

Wow what a thing to say about somebody you don't even know.... Sheesh.

[Vort]

4 hours ago, Lost Boy said:

I am in the process of buying a new home. [...] I finally decided to get the pre-approval letter from the mortgage company.  The amount they came back with was nearly double what I can comfortably afford. [...] The amount I told my wife was much less (that was before I heard from the lender, so it wasn't a lie).  But now do I tell her what the real number is knowing that she really doesn't try to understand our finances?  Or do I just keep mum on it

I see no reason to lie, nor to give more information than your wife wants. Just tell her, "Yep, we were approved." That's all that matters. If she really has no clue what the finances mean, how is it meaningful to tell her the exact number you're preapproved for? In her case, that might be the equivalent of telling her, "Here's how much we can spend" -- which is false.

[Lost Boy]

Just now, Vort said:

I see no reason to lie, nor to give more information than your wife wants. Just tell her, "Yep, we were approved." That's all that matters. If she really has no clue what the finances mean, how is it meaningful to tell her the exact number you're preapproved for? In her case, that might be the equivalent of telling her, "Here's how much we can spend" -- which is false.

I found a better solution.  I put together a simple table showing how much more we would have to pay based on the price of the house.

She knows how much money we save each month.  So I ended up telling her the real number for what we are approved and then went over the table with her.  She agreed that the amount I proposed was about our limit.

[Guest]

Don't listen to the load officer.  Listen to Dave Ramsey.  In fact, I'd recommend you get his book Total Money Makover.  It will transform your wife and your life.

He recommends either 30% of your net or 25% of your gross whichever is lower.  The 50% number was because banks were being so "stingy" with their money that they wouldn't lend to people who couldn't afford it.  ...How dare they...

No matter how much you're making a 50% all-inclusive cost is NOT the way to go.  If you're making so much that 50% is basically disposable income, you should still get a cheaper home and just buy it instead of paying interest.  If you're making less, then still don't buy such an expensive home.

Always buy a cheap home and work your way on up as you pay them off.

[dellme]

5 hours ago, Lost Boy said:

I disagree.  Things have essentially gone up for ever.  I mean you get a few drops here and there, but there is always the recovery and things continue to grow.

Real-estate always retains some value even when the economy goes bust.  It is unlikely to be upside down for long if the economy goes south. 

I take it you didn't learn from '08? If you bought in '07 you are just now (on average) back to the same numerical price point as in '07 (and about 15-20% down when factoring in inflation). That's 10 years of being upside down . . . that's a long time.

The '08 crash wasn't a "few drops".  Dude, I was in a non-bubble city and prices collapsed at LEAST 50%, I bought a house for cash for LESS than what is sold for in numerical price in the mid 1980s.  Best investment of my life, sold it double my money in 4 years-sold it and bought another house in a different part of town just as the market was starting to recover in that area, and will (hopefully) double my money there too-2nd best investment of my life.

Of course there is always a recovery (unless the government mucks things up so bad it can't recover), the question is can you sustain yourself until the recovery happens. For some people that is only 3 months for others it ends up being several years and banks don't care if it's 3 months or 3 years-you default and they will take the house.

You seem like a really smart guy, I'm not saying don't buy a house, just that we are very close to a precipice of a recession, so be prepared for a drop.  The economy right now is awesome, but it won't last and the storm is coming-now is the time to prepare for it.  All the signs are there that this sucker is going down soon-stock market is really jittery, Fed Res. is raising interest rates (they will hike until they put the economy into a recession), housing prices are high, gas prices are spiking, etc.

Now, I am in the process of buying and selling myself (buying first, selling second) and I hate being exposed to the downside and I've very, very attuned to the market right now and the moment this sucker starts to turn south (i.e. inventory builds) and my house isn't sold, that price is getting slashed.  I do not want to be holding the house I'm selling into the fall-I'm really, really leery about that.  I don't care if I lose out on some money, I want my house sold before the market crashes.

As long as I sell before the crash-I don't really care about the crash b/c I'm just trading dollars and I've already factored in what I think would be a bottom price (~30% haircut) and with what I've made by having some good luck it won't hurt a bit.

Let me just tell you when the bust happened in '08, it was real, real bad. Unless you were actually buying (or selling) a house in '10 you really don't have a clue as to how incredibly bad it really was, the newspaper reports didn't do it justice. You had to be on the ground level to understand how bad it was.  They were giving them away, weekend after weekend after weekend after weekend of over 200-300+ houses being sold at auction with multiple auctions each weekend, livable homes for 10k, 20k, 30k, McMansions for 150k that previously sold for 400k+.  I still don't think people realize just how bad the market was b/c Fed Gov. bought up a significant amount of homes and never released them to market.

Put it this way, incomes in 10 years have gone up 10-maybe 15%, now if the income level wasn't sufficient in '08 to sustain housing, why would an income level only 10-15% greater be able to sustain the same price level?  It can't and it won't.

 

Edited May 23, 2018 by dellme

[dellme]

2 hours ago, Carborendum said:

Always buy a cheap home and work your way on up as you pay them off.

#winning