Best mortgage lenders for the ER crowd?

[cardude]

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!

 

[HsiaoChu]

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.

Z

 

[brewer12345]

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.

 

[W2R]

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"?

 

[calmloki]

Pointed a friend at the PenFed 30 year 5% fixed loan. Worth checking out.

 

[frayne]

If you have high net worth, why not pay cash and forego the loan ?

 

[haha]

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

 

[Darryl]

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.

 

[molly]

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.

 

[ziggy29]

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.

 

[frayne]

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

Scuse me, while I kiss the sky !

 

[haha]

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

 

[Nords]

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.

 

[frayne]

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.

 

[ERD50]

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.

-ERD50

 

[haha]

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

 

[Bikerdude]

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.

 

[youbet]

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.

 

[cardude]

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.

 

[cardude]

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.

 

[cardude]

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.

Nords:

If all I can get is 28% of my reportable "income" of $6700 then I would just have to put a little more money down to get to a $1876 payment. Surely with enough money down some silly bank or credit union would do the loan, right? That payment would put me at about a 58% LTV.

PS
Went on a surfing trip to my secret spot in Costa Rica last week. Surf was kind of small in the chest high range with some bigger sets every once and awhile, but clean and loads of fun.

Still don't want to live there full time-- much easier to just visit a few times a year. Rented a nice 3 bedroom house with an easy walk to the beach for $1000 for the week and split it between 5 guys. They are trying to sell the house for $500K. Doesn't make any sense to buy down there when you can rent so cheaply IMO.

 

[Nords]

If all I can get is 28% of my reportable "income" of $6700 then I would just have to put a little more money down to get to a $1876 payment. Surely with enough money down some silly bank or credit union would do the loan, right? That payment would put me at about a 58% LTV.

Either that or buy a lower interest rate by paying points. This is where the mortgage broker can tap into their databases and find the combination of loan amount & interest rate most likely to be approved.

On our rental refi they wouldn't even waive the escrow account. Non-negotiable, unless we were willing to pay an extra quarter-point of interest.

Went on a surfing trip to my secret spot in Costa Rica last week. Surf was kind of small in the chest high range with some bigger sets every once and awhile, but clean and loads of fun.

Excellent! I'm not sure the mortgage brokers or the lenders appreciate that aspect of refinancing...

 

[ERD50]

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 ....

Well we can agree to disagree, but I do find it helpful to understand the context of the question. If you said "because my brake fluid is low every week", it would be more helpful to suggest that you have an expert look at your brakes, rather than looking for a cheap source of brake fluid. And if your brakes fail and you run into me, it becomes helpful to me too!

I'm sensitive to this, as I have a relative who is great at asking me for detailed, specific info about this or that. Turns out, 99/100, when you ask *why* he wants to know that information, the real solution is something completely different than what he asks about. And it would be a waste of time for both of us to dig up the requested info. And the real solution is almost always simpler, less expensive and better than what he was asking about.

-ERD50

 

[haha]

I'm sensitive to this, as I have a relative who is great at asking me for detailed, specific info about this or that. Turns out, 99/100, when you ask *why* he wants to know that information, the real solution is something completely different than what he asks about. And it would be a waste of time for both of us to dig up the requested info. And the real solution is almost always simpler, less expensive and better than what he was asking about.

-ERD50

Is it possible that this could be seen as patronizing? One of my sons sometimes asks me narrow technical questions that might usefully be approached more broadly, but woe betide me if I venture beyond the narrowly defined requested item.

Ha

 

[ERD50]

Is it possible that this could be seen as patronizing? One of my sons sometimes asks me narrow technical questions that might usefully be approached more broadly, but woe betide me if I venture beyond the narrowly defined requested item.

Ha

I suppose it can come across that way. But you know what? This world (fortunately) is made up of all different types of people. Since in my heart, I am honestly trying to be helpful, I am OK with it, even if the person isn't that thrilled with my approach. To *not* do what I see as being the most helpful thing would be more troubling to me than having someone think I am being patronizing. And my personal experience is, in the end, they are happier getting the real solution, rather than the solution they asked about.

Obviously, you learn if people are really touchy about this (easier in real life with visual feedback), and you adapt. No one has poisoned my soup....yet.

But some people totally avoid any sense of conflict like that. I once saw a guest fall out of a chair at my Mother's house. Later, my Mother said to me- "I saw how he was leaning back in that chair, and I just *knew* it was going to tip over, because those chairs do that.". I said - why didn't you warn him? She just didn't want to 'correct' him in front of other people.

So you see - I'm built 180º different. I would *want* someone to warn me about something - don't worry about 'embarrassing' me. A slightly bruised ego is better than a broken neck!

-ERD50