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Best mortgage lenders for the ER crowd?
Old 02-27-2010, 08:05 AM   #1
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Best mortgage lenders for the ER crowd?

I own a fairly expensive home with a 5% mortgage, but the rate is only fixed for 7 years. The reason I did not fix the loan for 30 years was because at the time (early 2009) I could not find anyone who would do it for me since I had no W2 income. In fact, I could barely find anyone to do the loan at all due to the financial panic. I had a relationship with my current lender when I DID have W2 income, so they did the loan but would only do an ARM.

Anyway, I would like to turn this mortgage into a LT fixed rate loan so I don't have to worry about refinancing it in the future when rates could be higher, or have to pay it off with cash reserves (which I have but don't really want to put into the house). I realize I could just pay the loan off and not worry about it, but that's not what I want to do right now for various reasons.

Are there ER-friendly lenders who understand how to make a loan to ER-type folks who have a high net worth but no W2 income to speak of? DW does work and has W2 income, but she is a public school librarian and does not make enough money to qualify for our existing loan I'm pretty sure. Our credit scores are very good and we have extensive credit history, including paid off homes and businesses.

Thanks!
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Old 02-27-2010, 08:39 AM   #2
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See if you can find a local Savings and Loan to help. Assuming you are not moving in retirement, they will be the most community oriented, and oriented toward servicing the loan themselves. You want flexibility and a bank that can pay attention to you. If they resell it you will get none of that.

Just my Opinion.

The mortgage we got for the house we are moving to was one of these. We have/had three properties to sell. We've sold two of them together and the S&L simply readjusted our payments without any rigamarole at all. And now the renter virtually pays both the taxes and the reduced mortgage. But if we'd had a sold mortgage, that could never have happened. Additionally the S&L was delighted to get another 30% of the mortgage back so that it could loan more out. They are also way more willing to do a fixed rate and to adjust it when the rate changes for very little.

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Old 02-27-2010, 08:48 AM   #3
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I think the issue you may face is that when you take a fixed loan you are essentially dealing with the agency underwriting gudelines unless you are talking about a true jumbo (in which case I wish you luck). I would suggest that you contact a mortgage broker and have a candid discussion with them about your chances of qualifying for a fixed rate loan. If you are a Schwab client, you could also call up their mortgage division and chat, since my experience with them for a HELOC has suggested that they are willing to perhaps color a bit outside the lines if you are a client with a history and substantial assets.
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Old 02-27-2010, 08:57 AM   #4
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I am curious - - Is there a possibility that you might not be able to refinance into a 30-year fixed? If so, what is your "Plan B"?
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Old 02-27-2010, 09:19 AM   #5
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Pointed a friend at the PenFed 30 year 5% fixed loan. Worth checking out.
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Old 02-27-2010, 05:26 PM   #6
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If you have high net worth, why not pay cash and forego the loan ?
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Old 02-27-2010, 09:02 PM   #7
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When 30 year, 5% loans are available, some of us want them. A mortgage is a negative bond, and again to some of us a negative bond looks like a good idea right about now.

Likely anyone here knows that he could just pay cash, but the question before us in this thread is not "why don't you pay cash", it is "how does an ER get a loan?".

For discussion of the morality, wisdom and general good karma of paying off the mortgage vs. carrying a mortgage see numerous older threads, including some in which a member or two fell on their swords.

Ha
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Old 02-27-2010, 10:55 PM   #8
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Try Churchill Mortgage Dave Ramsey claims they use their brains instead of a cookie cutter when deciding who to lend to. I almost suggested what Frayne said but don't want to open that can of worms.
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Old 02-28-2010, 08:50 AM   #9
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Yesterday I was talking with a Realtor friend. She told me that she has a house that she has "sold" FIVE times. Each time the deal fell through because the parties couldn't get mortgages. She said that they have tightened the rules so much that anything unusual in their background kicks them out of the system.
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Old 02-28-2010, 09:05 AM   #10
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Try Churchill Mortgage Dave Ramsey claims they use their brains instead of a cookie cutter when deciding who to lend to. I almost suggested what Frayne said but don't want to open that can of worms.
Of course, Dave Ramsey would have his head for taking out a loan when he can afford to pay cash.
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Old 02-28-2010, 10:32 AM   #11
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When 30 year, 5% loans are available, some of us want them. A mortgage is a negative bond, and again to some of us a negative bond looks like a good idea right about now.

Likely anyone here knows that he could just pay cash, but the question before us in this thread is not "why don't you pay cash", it is "how does an ER get a loan?".

For discussion of the morality, wisdom and general good karma of paying off the mortgage vs. carrying a mortgage see numerous older threads, including some in which a member or two fell on their swords.

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Old 02-28-2010, 11:12 AM   #12
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I understand your feeling. Perhaps my response seemed a little over the top.

However, it seems very easy for posters to jump right into changing someone's improper thoughts, instead of just trying to answer the question as asked. It hijacks threads, since many more people have an opinion about the proper or improper nature of some financial action than actually have factual knowledge on the requested topic. Soon anyone who is interested in the original topic has given up and avoids the thread, as it becomes mostly just people telling not to do it because it is immoral or in conflict with some radio-wave expert's opinions. IMO it detracts considerably from the utility of the forum.

Ha
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Old 02-28-2010, 11:20 AM   #13
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Originally Posted by cardude View Post
Are there ER-friendly lenders who understand how to make a loan to ER-type folks who have a high net worth but no W2 income to speak of? DW does work and has W2 income, but she is a public school librarian and does not make enough money to qualify for our existing loan I'm pretty sure. Our credit scores are very good and we have extensive credit history, including paid off homes and businesses.
ER-friendly? I wouldn't hold my breath.

As another poster's suggested, you could try PenFed's mortgage rates. If you're qualified for membership with NFCU you could take a look at them too.

Some of the mortgage lenders are reverting to the standard 28% mortgage debt/36% total debt ratios, and the denominator of that ratio is income. They'll count dividends/interest as income in addition to pension/SS, but would be reluctant to consider cap gains from one-time sales. Maybe you could make the case that a 72(t) withdrawal counts as income. But almost every mortgage these days is conforming to FHA resale guidelines.

Another option might be screening Bankrate.com's interest rates for your local banks. I stumbled across a small regional bank that way last year and we ended up refi'ing both our residence and our rental through them.

If you're not having any luck with your own search you could try a mortgage broker or consider paying points for a lower rate.

I don't think any lenders give a crap about credit history, just its contribution to the present credit score.
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Old 02-28-2010, 12:00 PM   #14
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I understand your feeling. Perhaps my response seemed a little over the top.

However, it seems very easy for posters to jump right into changing someone's improper thoughts, instead of just trying to answer the question as asked. It hijacks threads, since many more people have an opinion about the proper or improper nature of some financial action than actually have factual knowledge on the requested topic. Soon anyone who is interested in the original topic has given up and avoids the thread, as it becomes mostly just people telling not to do it because it is immoral or in conflict with some radio-wave expert's opinions. IMO it detracts considerably from the utility of the forum.

Ha
Sorry, been busy looking for my sword to disembowel myself.

Actually I was only offering a suggestion based on the original poster's comment about high net worth, didn't mean or imply that I wanted to hijack the thread at all.
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Old 02-28-2010, 02:01 PM   #15
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I understand your feeling. Perhaps my response seemed a little over the top.

However, it seems very easy for posters to jump right into changing someone's improper thoughts, instead of just trying to answer the question as asked. ... IMO it detracts considerably from the utility of the forum.
Well, just my two cents - I understand what you are saying, but IMO it kinda depends on the question and how it was stated.

For example, if someone asks "Where's the best place to buy Brake Fluid in bulk, cheap?", it certainly would be helpful to ask why someone would need so much brake fluid. There are some people who are not aware that cars don't normally go through brake fluid in the same way as they might oil and gas and WW fluid.

In this case, I thought it was pretty clear that the OP was well aware of the loan/no-loan options and was just looking for a source. I guess it wasn't so apparent to others.

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Old 02-28-2010, 02:20 PM   #16
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In this case, I thought it was pretty clear that the OP was well aware of the loan/no-loan options and was just looking for a source. I guess it wasn't so apparent to others.

-ERD50
Good point. It happens that OP CarDude is a long time successful new car dealer. If he doesn't understand the good and bad of debt, who would?

Also, when I see many posts by people who say they are in the 15% tax bracket, I think help with borrowing strategies might be useful to many of us. I am beginning to consider buying a place, and I will want to borrow and I expect that in the current environment there could be roadblocks to someone who relies on portfolio income.

Also, I think I have noticed a greater tendency for forum answers to be prescriptive, rather than just technical.

There is another current thread where the OP is trying to get help with a technical question about debit cards. But the thread keeps getting cluttered with parenting advice, which IMO is somewhat skew to the question before the floor.

But I guess that if someone asked the best human poisons, we might all want to ask why do you want to know?

Ha
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Old 02-28-2010, 02:38 PM   #17
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I think the issue you may face is that when you take a fixed loan you are essentially dealing with the agency underwriting gudelines unless you are talking about a true jumbo (in which case I wish you luck). I would suggest that you contact a mortgage broker and have a candid discussion with them about your chances of qualifying for a fixed rate loan. If you are a Schwab client, you could also call up their mortgage division and chat, since my experience with them for a HELOC has suggested that they are willing to perhaps color a bit outside the lines if you are a client with a history and substantial assets.
I've had luck with them in the past and just recently did a refi. However, I do have a pension and SS income in addition to a sizable brokerage account. You can ask if your account manger will put in a good word for you with the banking side of the house. Credit is still tight. Too much money in the carry trade.
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Old 02-28-2010, 03:00 PM   #18
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For example, if someone asks "Where's the best place to buy Brake Fluid in bulk, cheap?", it certainly would be helpful to ask why someone would need so much brake fluid.
I guess opinions do vary because if I wanted suggestions for sources of cheap brake fluid in bulk and you asked me why, I can't imagine how it would be helpful other than to satisfy your idle curiosity or make your political point concerning the ecolgical impact of high levels of brake fluid usage. You might as well ask me what it means to be a bulk quantity brake fluid user in the midst of history.
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Old 02-28-2010, 03:33 PM   #19
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I had forgotten Schwab had a mortgage division and I have a pretty good chunck of money at a brokerage account there, so I'm going to check with them Monday. Thanks for the reminder!

I'm just looking for a conforming loan of around $400K (about 65% of our home's appraisal), and with DW's W2 income and net rental income and portfolio interest income I can document about $6700 per month in total income so maybe that will work.
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Old 02-28-2010, 03:36 PM   #20
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I am curious - - Is there a possibility that you might not be able to refinance into a 30-year fixed? If so, what is your "Plan B"?
I guess it's possible nobody would want to do it, but I'm thinking with enough money down surely I could convince someone to do the loan. If not I guess I will just pay it off in 7 years and forget about it.
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