|
|
09-19-2016, 02:42 PM
|
#21
|
gone traveling
Join Date: Aug 2006
Posts: 994
|
Quote:
Originally Posted by Texas Proud
One of the problems is they look at debt payments to income ratios.... so if you have low income, then you 'must' have low monthly payments...
I do not have to agree with their methods, just understand them and how to get around them if I need to....
|
I have zero debt. My house is paid-off and I have excellent credit.
The one and only reason I could not qualify was my low income...
which I purposefully keep low for tax purposes.
.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
09-19-2016, 02:45 PM
|
#22
|
gone traveling
Join Date: Aug 2006
Posts: 994
|
Quote:
Originally Posted by W2R
So true.
Last year I decided to buy my home in cash. I sold mutual funds to do it, plus used my cash reserves, and replenished my portfolio somewhat with the proceeds from selling my prior home. For me, paying in cash makes life simpler, and I like not having to deal with mortgage company tyrants and all those stupid hoops they want people to jump through. I don't like to be jerked around.
But for the OP and many other forum members, YMMV and there are many ways to pay for a home.
|
My "can't get a mortgage" experience taught me a lesson... to not have the vast majority of my nest egg locked up in investments. So now I am working on having more liquidity.
.
|
|
|
09-19-2016, 03:10 PM
|
#23
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
|
Quote:
Originally Posted by Helena
I have zero debt. My house is paid-off and I have excellent credit.
The one and only reason I could not qualify was my low income...
which I purposefully keep low for tax purposes.
.
|
I dont care what their computer generated guidelines say... Someone who is debt free with excellent payment history would be the type of person I would want to loan money too. The logic escapes me...I do have a very healthy pension, and I could go get over my head in debt with that through a loan, while people on this forum who could "own me" with their assets cannot...The logic escapes me.
|
|
|
09-19-2016, 03:25 PM
|
#24
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,327
|
Quote:
Originally Posted by Gatordoc50
Thanks for the input. If we break some PenFed CDs we would only be 100 thousand short. The penalty seems stiff, 30 percent of the interest we would have earned if kept to maturity. Not happy about that but we'd save on some closing costs. I'm thinking we could find a bank or credit union to lend us 100k.
|
Another option might be to use the CDs as collateral for a loan until they mature. This doesn't work if they are IRA CDs. The rate is generally 2-3 pct above the CD rate.
Sent from my iPhone using Early Retirement Forum
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
|
|
|
09-19-2016, 03:27 PM
|
#25
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,765
|
A big part of the OP's problem is likely that he/she is trying to get a mortgage for a second home. We had major problems getting a refi on our second home, even though we didn't even have a mortgage on our primary. I actually ended up buying a couple of rental units (for cash) partially to mitigate the "no income" issue. Before that happened I did manage to refi with Chase back when they were doing the Obama refinance credit thing.
I was told by many banks that I would have been able to get a mortgage on our primary residence based on our assets, but not the second home. Seems absurd, since you're making the same payment no matter which home it's on, but that's the credit industry today.
Also, back then (2010-ish) we were told that transferring money from our retirement accounts wouldn't do it. If there was a automated withdrawal from an IRA it would be fine, but manual transfers wouldn't count. Stunning levels of stupidity.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
|
|
|
09-19-2016, 03:32 PM
|
#26
|
Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,606
|
Quote:
Originally Posted by harley
I was told by many banks that I would have been able to get a mortgage on our primary residence based on our assets, but not the second home. Seems absurd, since you're making the same payment no matter which home it's on, but that's the credit industry today.
|
Perhaps more personal pain is imparted to the average Joe in loosing his/her main home then an extra home?
If I had to default, all things being equal, I know which one I would default on.
|
|
|
09-19-2016, 05:48 PM
|
#27
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,327
|
FWIW the asset to income conversion formula is somewhat new e.g. 2013 and even worse a lot of lenders are not aware or choose not to use since it is a bit more work for them. My point is if anyone had a bad experience many yrs ago don't let that keep you from giving it a shot. I guess there are more folks living off of personal savings with little to no pension nowadays so Freddiemac put out new guidelines.
Sent from my iPhone using Early Retirement Forum
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
|
|
|
09-19-2016, 09:08 PM
|
#28
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,242
|
Quote:
Originally Posted by Helena
I have zero debt. My house is paid-off and I have excellent credit.
The one and only reason I could not qualify was my low income...
which I purposefully keep low for tax purposes.
.
|
Right now you have no debt, but if you get a mortgage then you will....
And it would seem that the monthly payment amounts on a new mortgage cannot be supported by your low income....
That is what I mean by debt payment to income ratio.....
|
|
|
09-19-2016, 09:13 PM
|
#29
|
Thinks s/he gets paid by the post
Join Date: Aug 2006
Posts: 1,558
|
I'd look at other banks. Wells Fargo has some weird criteria. I had a friend that worked there during the housing bubble, and they wouldn't loan him anything rational for a home loan. He had no trouble getting a loan from anyone else.
|
|
|
09-19-2016, 09:30 PM
|
#30
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
|
Quote:
Originally Posted by Hamlet
I'd look at other banks. Wells Fargo has some weird criteria. I had a friend that worked there during the housing bubble, and they wouldn't loan him anything rational for a home loan. He had no trouble getting a loan from anyone else.
|
We when we're trying to refi when rates dropped I asked lending places up front if they considered investment assets, especially retirement account balances, in the underwriting. The places that said sure were our two credit unions, though I don't have a statistically large enough sample size to know if that was just coincidence or not. Some lending places only wanted to look at regular kinds of income like W2 forms, 1099 forms, pension or SS payments and wouldn't consider investment income if wasn't the kind of income that showed up on tax returns every year.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
|
|
|
09-19-2016, 09:33 PM
|
#31
|
gone traveling
Join Date: Aug 2006
Posts: 994
|
Quote:
Originally Posted by Texas Proud
Right now you have no debt, but if you get a mortgage then you will....
And it would seem that the monthly payment amounts on a new mortgage cannot be supported by your low income....
That is what I mean by debt payment to income ratio.....
|
If possible, I would do what I did last time.... pay down my mortgage and re-amortize with the money from the sale of my current house. Then I would pay the whole thing off asap. Last time my new house was paid off in three years. This time around I could pay it off with existing assets.
.
|
|
|
09-19-2016, 09:54 PM
|
#32
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,930
|
To show you how "stupid" the rules are, we were almost turned down for a mortgage because of "low income" until they reviewed our 1040's and saw "large" income (taxable) due to converting tIRAs to Roths! That's all they needed. OP might see if his/her 1040 shows such "phantom" income. YMMV
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
|
|
|
09-19-2016, 10:05 PM
|
#33
|
Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 3,361
|
Quote:
Originally Posted by Helena
I have zero debt. My house is paid-off and I have excellent credit.
The one and only reason I could not qualify was my low income...
which I purposefully keep low for tax purposes.
.
|
Since banks use 1040 income as income, managing for low taxes has downsides. If for example one were to get a bunch of dividends they would qualify as income, or do banks reject schedule B income? (you do pay taxes on that income just the same)
|
|
|
09-19-2016, 10:39 PM
|
#34
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,099
|
Quote:
Originally Posted by Koolau
To show you how "stupid" the rules are, we were almost turned down for a mortgage because of "low income" until they reviewed our 1040's and saw "large" income (taxable) due to converting tIRAs to Roths! That's all they needed. OP might see if his/her 1040 shows such "phantom" income. YMMV
|
Another excellent reason to do conversions to ROTH.
|
|
|
09-19-2016, 11:15 PM
|
#35
|
Thinks s/he gets paid by the post
Join Date: Feb 2003
Posts: 2,395
|
A while ago I looked at the "how much mortgage can I afford" calculator at BankRate.com. They used Wages + SS + Pension + Interest + Dividends in the calculation. In other words, 1040 income. I didn't think of Roth conversions, as Koolau mentioned, as that seems so transitory.
But I guess it isn't any more transitory than any of these following actions, AFTER getting the mortgage: Quitting the job; selling or redeeming the interest-bearing instruments; selling the dividend-producing equities.
So just the most-recent 1040 will do it?
__________________
-- Telly, the D-I-Y guy --
Two fools dancing on the hands of time
|
|
|
09-20-2016, 01:06 AM
|
#36
|
Recycles dryer sheets
Join Date: May 2016
Posts: 313
|
While reviewing mortgage lenders I recall banks and credit unions revealed how often they sold their mortgages. One credit union I checked out sold either 0% or 25% (forgot which), suggesting they kept most of their loans in house. They might have more flexibility, since they only need to adhere to their own criteria.
|
|
|
09-20-2016, 05:33 AM
|
#37
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,930
|
Quote:
Originally Posted by Telly
A while ago I looked at the "how much mortgage can I afford" calculator at BankRate.com. They used Wages + SS + Pension + Interest + Dividends in the calculation. In other words, 1040 income. I didn't think of Roth conversions, as Koolau mentioned, as that seems so transitory.
But I guess it isn't any more transitory than any of these following actions, AFTER getting the mortgage: Quitting the job; selling or redeeming the interest-bearing instruments; selling the dividend-producing equities.
So just the most-recent 1040 will do it?
|
It's now been 6 years, but IIRC, they wanted to see 3 years of 1040s. As it turned out, those were the three years we hit the conversions (and actually taking some tIRA money to spend.)
What seems so silly about using 1040 income is that it says so little about what I would think of as income. In the case of converting from tIRA to Roth, one is simply paying the taxes (thus ending up with somewhat less total assets in the process.) Actually spending tIRA money - as we did one of those years - LOWERs your assets. One would think that was a "bad" thing to banks, but they have to slavishly follow their rules (rules primarily set by congress IIRC due to the housing bubble bust - but I could be wrong.) In any case, it didn't make sense to us then or now. We just had to play their silly little game.
YMMV
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
|
|
|
09-20-2016, 06:19 AM
|
#38
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,374
|
Quote:
Originally Posted by Koolau
To show you how "stupid" the rules are, we were almost turned down for a mortgage because of "low income" until they reviewed our 1040's and saw "large" income (taxable) due to converting tIRAs to Roths! That's all they needed. OP might see if his/her 1040 shows such "phantom" income. YMMV
|
Agree, for allegedly smart people you would think that they would know that moving money from one pocket to another is not income. What I do is just say it is pension income and they totally buy it since it appears on the 1040 as pension income. If they ask further than I would elaborate but they don't ask further so I don't elaborate.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
09-20-2016, 06:25 AM
|
#39
|
Full time employment: Posting here.
Join Date: Jul 2011
Posts: 723
|
Quote:
Originally Posted by Koolau
To show you how "stupid" the rules are, we were almost turned down for a mortgage because of "low income" until they reviewed our 1040's and saw "large" income (taxable) due to converting tIRAs to Roths! That's all they needed. OP might see if his/her 1040 shows such "phantom" income. YMMV
|
This is because the underwriters are not trained in tax; just know what rules to follow. They looked at the taxable IRA distribution and treated it like income, not unlike dividend and interest income. Their focus is on the main schedules, not Form 8606 that actually details the conversion.
|
|
|
09-20-2016, 08:22 AM
|
#40
|
Recycles dryer sheets
Join Date: Jul 2013
Posts: 385
|
Important to keep this in mind when deciding whether to payoff your sub 3.5% mortgage to feel better.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
Similar Threads
|
Thread |
Thread Starter |
Forum |
Replies |
Last Post |
i love soup
|
lazygood4nothinbum |
Other topics |
19 |
01-23-2007 11:49 PM |
Soup Lines Ahead? Bill Gross Speaks
|
haha |
FIRE and Money |
45 |
09-05-2006 06:19 PM |
Soup
|
Marshac |
Other topics |
16 |
08-11-2006 12:52 AM |
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|