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Need to vent. Mortgage frustrations.

92 Green YJ

92 Green YJ

General Lee Jeep
Joined
May 19, 2020
Member Number
401
Messages
777
Loc
Mariaville, ME
I swear to god. It’s like they want people to fail in this damn country.

so here’s the deal. Finally making moves to get the fuck out of Kommiefornia. Found an absolutely amazing property in Maine. Put an offer in and got accepted immediately. Seller didn’t even counter as the property has been on the market for a long time. Fantastic. Let’s get this ball rolling. I have the inspection lined up, we have the real estate attorney lined up, things are moving. I have until 2/18 to get a mortgage approval letter in. Should be no problem.

i have a credit score of 821. Excellent credit. Have never missed or been late on a mortgage payment in the 7 years we have owned our house here. Selling here will net us a little over $300k in profit. Our offer on the new place was accepted at $450k. Plan to put $250k from the sale of the ca house down on the new place meaning I am looking at mortgaging the additional $200k. So 56% down. Also have a substantial investment portfolio backing me up that earned 110k in just the last year.

so what is the issue? Neither the wife or I are currently working. I haven’t worked in almost a year because of the China virus. Wife hasn’t worked since before our son was born because I was working full time and our portfolio always nets a solid annual increase.

apparently due to Fannie Freddie government red tape stuff, this means we can’t get a traditional mortgage. Because of their rules on this, they can’t do a traditional mortgage to be sold via the secondary mortgage market with only investment income and portfolio backing it up. Only way they will do that is if you are over 65 and your holdings are in retirement accounts. Even though all I have to do is call my broker and tell him I want to pull $50k out of the portfolio and I have it as cash I. My checking account 2 days later. Apparently this isn’t good enough for Fannie Freddie.

the only banker I’ve gotten to offer me anything so far is at a CU in Maine. And that is a 5/1 ARM at a 4% rate for the first five years which is fucking obscene. Our current rate on our house in CA is 3.4% and our credit wasn’t as good when we bought here nor did we have the investments backing us up. Average national rates today are 2.7% which I should easily qualify for with my credit rating and financials. But just because the wife and I aren’t working, we can’t get one. You would think given what I have behind me banks would be tripping over themselves to give us a mortgage because even without working I have the means to pay my bills. We have no other debts at all either.

so it looks like my options are send a mountain of paperwork in and take this shitty 5/1 ARM or use our backup plan and just buy the whole damn property outright for cash. Downside with that of course is my money is earning well in the portfolio so I would be losing investment income by doing this, which is part of the reason I wanted a small mortgage to begin with. Keep my funds earning and get me the mortgage interest tax deductions.

I still have feelers out and am waiting to hear back from a couple of more mortgage companies, but so far I’ve had 2 say they couldn’t do a damn thing for me and the 1 offer the 5/1. It’s rather frustrating and I feel like I am being punished for being financially secure and responsible.
 
92 Green YJ said:
I swear to god. It’s like they want people to fail in this damn country.

so here’s the deal. Finally making moves to get the fuck out of Kommiefornia. Found an absolutely amazing property in Maine.
Click to expand...

Just curious, but why Maine?
 
Gravy said:
Just curious, but why Maine?
Click to expand...

Well when the wife finally agreed to bail out of Cali we went state by state and did a yes no or maybe. Wound up with 7 states. So we drilled down and did a bunch of research on each state. Maine won out. It’s the safest state in the country, top ten healthiest, excellent schools, low population density, Rey reasonable housing and property costs, good cost of living, 4 seasons, etc.
 
[486 said:
;n305025]so just buy the house cash rather than paying some fuckwad interest on a house you could own free and clear

I just don't see the issue
Click to expand...

Yeah. We’ve been debating that as well. We do like the idea of no mortgage and owning outright. Would just be cutting our earnings in the portfolios by a bit to do it, though that would replenish itself over time.
 
92 Green YJ said:
Well when the wife finally agreed to bail out of Cali we went state by state and did a yes no or maybe. Wound up with 7 states. So we drilled down and did a bunch of research on each state. Maine won out. It’s the safest state in the country, top ten healthiest, excellent schools, low population density, Rey reasonable housing and property costs, good cost of living, 4 seasons, etc.
Click to expand...

Boy they lied to you ! :lmao: ETA: there are only two seasons, winter and construction:lmao:
Can you say you are self employed and provide them with 13 months of bank statements? That's what I did when I bought this place ( was self employed, I avoided showing them my tax returns this way). Whereabouts in Maine? My brother owns land in Burnham, I have not been yet as it's 6 friggen hours away! Good luck and congrats.
 
I'd take the ARM. 4% isn't that great of a fuckening, and in a year or 2 or whatever, you can pay it off or refi it or whatever.

i'll assume that since you said you made $100k off your investment that you aren't talking about $100k from 2,500,000. if you are, then go ahead and pay cash.

"worse" case scenario if the ARM looks times up and looks to go wonky, cash it out then
 
dave_dj1 said:
Boy they lied to you ! :lmao: ETA: there are only two seasons, winter and construction:lmao:
Can you say you are self employed and provide them with 13 months of bank statements? That's what I did when I bought this place ( was self employed, I avoided showing them my tax returns this way). Whereabouts in Maine? My brother owns land in Burnham, I have not been yet as it's 6 friggen hours away! Good luck and congrats.
Click to expand...

I’m not too concerned about winter. According to the massive amount of paperwork required on the one guy that’s mentioned the ARM, they already want to see all of that crap for the ARM. And they want an explanation of each large deposit into the accounts to know where it came from along with a whole bunch of other crap. Two years of full tax returns with every single page which in our case is about 50 pages each year, etc.

the property is in Mariaville which is basically right smack dab between Bangor and Ellsworth. It’s a 6 bed, 5 bath, 5,500 sq ft home with an attached 2 car barn with a workshop on the second level on 24 acres.
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92 Green YJ said:
Yeah. We’ve been debating that as well. We do like the idea of no mortgage and owning outright. Would just be cutting our earnings in the portfolios by a bit to do it, though that would replenish itself over time.
Click to expand...

I'm not the smartest financial guy but I just can't get right with the thought of borrowing money in order to preserve investments/savings

if you could make money on investments by borrowing money, wouldn't a bunch of people (who investing is their life) already be doing it?
Seems like there wouldn't be an upper limit on the amount of instantaneous wealth you could generate, which instantly puts it in the same category as perpetual motion machines.
 
92 Green YJ said:
I’m not too concerned about winter. According to the massive amount of paperwork required on the one guy that’s mentioned the ARM, they already want to see all of that crap for the ARM. And they want an explanation of each large deposit into the accounts to know where it came from along with a whole bunch of other crap. Two years of full tax returns with every single page which in our case is about 50 pages each year, etc.

the property is in Mariaville which is basically right smack dab between Bangor and Ellsworth. It’s a 6 bed, 5 bath, 5,500 sq ft home with an attached 2 car barn with a workshop on the second level on 24 acres.
Click to expand...

gorgeous!

pretty amazing that price-wise it compares to a studio style condo in CA :eek:
 
[486 said:
;n305072]

I'm not the smartest financial guy but I just can't get right with the thought of borrowing money in order to preserve investments/savings

if you could make money on investments by borrowing money, wouldn't a bunch of people (who investing is their life) already be doing it?
Seems like there wouldn't be an upper limit on the amount of instantaneous wealth you could generate, which instantly puts it in the same category as perpetual motion machines.
Click to expand...

yes, i'd wager nearly everybody, or at least 99% of people who invest do so on borrowed money. closer to 100% for those whose investing is life.

hell, ever heard of a bank? making money with borrowed money is their business model :flipoff2:

for perpetual motion machines, ever heard of wall street? they don't seem to have an upper limit and mint so many millionaires that NYC can say things like "there is no shortage of money in this city, we just need to raise taxes to get it into the right hands"
 
[486 said:
;n305072]

I'm not the smartest financial guy but I just can't get right with the thought of borrowing money in order to preserve investments/savings

if you could make money on investments by borrowing money, wouldn't a bunch of people (who investing is their life) already be doing it?
Seems like there wouldn't be an upper limit on the amount of instantaneous wealth you could generate, which instantly puts it in the same category as perpetual motion machines.
Click to expand...

If his investments are making more than ~4%, which the should be, why wouldn't he borrow "cheap" money while he can?
 
Provience said:
yes, i'd wager nearly everybody, or at least 99% of people who invest do so on borrowed money. closer to 100% for those whose investing is life.

hell, ever heard of a bank? making money with borrowed money is their business model :flipoff2:

for perpetual motion machines, ever heard of wall street? they don't seem to have an upper limit and mint so many millionaires that NYC can say things like "there is no shortage of money in this city, we just need to raise taxes to get it into the right hands"
Click to expand...

so if I mortgage my house and do... something? with that money I get more money than I am paying in interest? Seems way fishy to me.
I've got a couple stocks that pay 7% dividends. I guess they'd pay out above a 4% mortgage. Dire straits have something to say about that...
 
bgaidan said:
If his investments are making more than ~4%, which the should be, why wouldn't he borrow "cheap" money while he can?
Click to expand...

there is a great many reasons why no debt and a cash-only full ownership lifestyle is significantly better.

exactly zero of them are "good financial sense", but that doesn't mean they aren't perfectly valid.

I look forward to being a zero debt cash only type of person, but i also aspire to being a poor rancher so it isn't exactly a life goal for everybody :laughing:
 
92 Green YJ said:
Well when the wife finally agreed to bail out of Cali we went state by state and did a yes no or maybe. Wound up with 7 states. So we drilled down and did a bunch of research on each state. Maine won out. It’s the safest state in the country, top ten healthiest, excellent schools, low population density, Rey reasonable housing and property costs, good cost of living, 4 seasons, etc.
Click to expand...

Awesome property.
 
OP - if you saw the thread on the place I just bought, I had to get creative with the financing after the first bank decided it was too risky after seeing the appraisal.

What you're looking for is a "portfolio lender" - one who will keep the loan in house and not sell it off. I got referred to one by a friend of a family member and he absolutely pulled through for me. Like you, I had extensive equity in my old house, but I wasn't selling it until I 100% closed on the new one (smartest thing I did in the whole deal) and he came up with the idea of doing a first and simultaneous 2nd mortgage. The 2nd was the amount I would immediately pay off when I sell my old house, leaving me with just the first, relatively low $$ mortgage at the end of the day. My original plan was to have to refinance after all the dust settled so I wouldn't be stuck making a payment on a ~$450k loan when I only owed $200k. The 2nd mortgage cost me me maybe $800 in closing costs but probably saved me a few grand in refi costs.
 
[486 said:
;n305093]

so if I mortgage my house and do... something? with that money I get more money than I am paying in interest? Seems way fishy to me.
I've got a couple stocks that pay 7% dividends. I guess they'd pay out above a 4% mortgage. Dire straits have something to say about that...
Click to expand...

if you mortaged your house full tilt and put all that money directly into 7% dividend yield bonds or stocks, yes, that would net you gobs of free money over the 4% mortage, especially considering that the loan would be declining over the period and the investment would be compounding.

you would need to be able to float enough cash to make the min. payment, but again you could certainly do that from monthly sale of stock in the amount of your note. the high risk in that is the variability of the underlying stock price, after the first, let's say 5 years, that wouldn't matter as much, especially if you had a highly diversified 7% yield account.

The transaction costs, that where you need to pay attention. if it costs you 1% annually to maintain or some number per transaction to sell, just be aware of it.
 
it isn't fishy so much as why these absurd long term rates are insane. hell i wouldn't particularly mind if 30 year rates were 8-10%.
 
Provience said:
if you mortaged your house full tilt and put all that money directly into 7% dividend yield bonds or stocks, yes, that would net you gobs of free money over the 4% mortage, especially considering that the loan would be declining over the period and the investment would be compounding.

you would need to be able to float enough cash to make the min. payment, but again you could certainly do that from monthly sale of stock in the amount of your note. the high risk in that is the variability of the underlying stock price, after the first, let's say 5 years, that wouldn't matter as much, especially if you had a highly diversified 7% yield account.

The transaction costs, that where you need to pay attention. if it costs you 1% annually to maintain or some number per transaction to sell, just be aware of it.
Click to expand...

My e-trade account lets me take the dividens as cash or reinvest it back in to partial shares. If you get creative enough, buy a certain value of a dividend stock that will pay the note and take that one as cash and the buy other(s) and reinvest the dividend. Easy money?

Of course, you also have to pay tax on the dividend so add that in tot he equation.
 
[486 said:
;n305093]

so if I mortgage my house and do... something? with that money I get more money than I am paying in interest? Seems way fishy to me.
I've got a couple stocks that pay 7% dividends. I guess they'd pay out above a 4% mortgage. Dire straits have something to say about that...
Click to expand...

you want a great added bonus kicker?

you could always swap around the ownership of the "stocks" that you've got and default on the mortgage :lmao: sure, it would be best to wait a couple years before doing it, and sure it would make it difficult to buy a home (rentals don't care) for a period of 2 years, but hell, you'd be selling your home to yourself and holy hell, if they pass this "eviction moritorium" again and for longer, you could easily have a year + of living rent free in a home being used as a bank account :lmao: just be frugal and don't buy shit. wambo-bambo.

of course, the discourage that. but it does happen and is why anybody is paying more than the 0% that the fed charges the banks :rasta:
 
bgaidan said:
My e-trade account lets me take the dividens as cash or reinvest it back in to partial shares. If you get creative enough, buy a certain value of a dividend stock that will pay the note and take that one as cash and the buy other(s) and reinvest the dividend. Easy money?

Of course, you also have to pay tax on the dividend so add that in tot he equation.
Click to expand...

eh, you only have to pay tax above...what, $13k for an individual? if you have no other income.


to be clear, i am NOT in any way suggesting that people mortgage their home to invest in "the stock market" at what just might be an absurd high water line for the year :laughing:
 
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