Profile picture for WhimseyWoman

Why can someone with terrible credit and practically no money get a mortgage, BUT

a person with excellent credit, 30% down, no debt, and ready funds equivalent to approximately 3 years of a middle-income (net) doesn't even have an option to apply?
  • August 23 2014 - US
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Answers (46)

Profile picture for user6959789
Maybe WhimseyWoman and ahbeach or whatever their current posting name is should write a book on how to ask questions but not listen/heed the answers given from both professionals and those with experiences that could be helpful. 
  • September 01 2014
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Profile picture for SoCal Engr
Are banks able to magically predict layoffs, acquisitions, retirement?

No, they cannot. Neither can they magically predict future employment, nor future compensation. Ergo, they default to "show me what you got...now".

How can a person possibly demonstrate reliable future income when no company anywhere offers employees guarantees?

Since no one has a crystal ball, the best indicator of reliable future income is the combination of "reliable past income" and "demonstration of current income". The absence of either factor is a significant negative.

Viewed in a case-by-case context, many policies (not just those of lenders) read as a few degrees off top-dead-center. And, if the person enforcing that policy is intellectually honest, they will agree with that assessment.

But, the reality is..
-- The person enforcing the policy is rarely in a position to change that policy.
-- The policy is in place to circumvent case-by-case risk analysis.

Sometimes, this absolutely blows chunks...especially when that policy gets in the way of what we believe is a perfectly reasonable course-of-action. I get that. Sometimes, it's even interesting to talk about the "what ifs?". But, when-all-is-said-and-done, the policy is-what-it-is. And, even if we could get the policy makers to realize the error of their ways, it's typically going to benefit "the next person".

Best of luck in your endeavors.
  • September 01 2014
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Profile picture for sunnyview
"Maybe you should file a complaint with the, newly created, Consumer Financial Protection Bureau."

That's the best laugh I've had all day. Preposterous to think about a govt consumer agency helps people...
  • September 01 2014
  • 2Yes

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Maybe you should file a complaint with the, newly created, Consumer Financial Protection Bureau. I think your argument carries more weight than any they've ever heard. I doubt they will. I wish I was wrong.
  • September 01 2014
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Profile picture for blank screen EXILED
I know it seems strange that one has to have a job in order to buy a house to be able to move to look for a job; but you need to consider that no one knows how long it will take to find that job unless you already have that letter of commitment in hand from a potential employer.    And no one knows how long your financial reserves will last before you can't make the payments without a steady income.

So the underwriters have decided they won't lend if there isn't evidence of income to support the payments for the amount being borrowed.  Credit cards are different; they will keep offering you credit cards and let you keep running the debt up not caring a bit if you can pay, as the also get paid from the companies that accept the credit cards, and they charge enough interest to make up the losses on those that default.  Plus they charge late fees and other penalties every time you are late.

So what is the difference if you buy a house, and then quit your job one month later?  Only that then it was "your choice" and the ramifications of not having income to pay the required payments is entirely your issue.  And the thought of losing the house is usually sufficient to keep most people from "quitting" until they have already accepted another job offer.

There are some exceptions for recent graduates; they will accept their income history and college status for the "past" as long as there is a letter of commitment from an employer that is hiring them on.

Yes, it is the same dilemma new business face.  They have to have resources for "start up", which requires a "history" to prove that the business has a good probability of being successful, or they have to have sufficient start up funds and living expenses funds until the company is on its feet.

That is only part of the reason there is so much economic disparity and range of incomes in this country.  Though one may like the idea of "socialized housing"; that is just not where the country is at.  And those countries that tried socialized find they don't have enough and the housing stock isn't built and replaced fast enough, as there is no incentive.  With a capitalist system, those at the top build what they want, and make something else available for those "moving up", with a trickle down all the way to the first time buyer at low income.
  • September 01 2014
  • 1Yes

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Profile picture for sunnyview
"Are banks able to magically predict layoffs, acquisitions, retirement?"

Nope, not more than an insurance company can predict a major health event or an accident. Both lenders and insurance companies use what amounts to an actuarial prediction of risk. 

Most times the risk follows lender developed criteria that they use job, down payment, decent credit etc. Not always, but lenders play the odds not bet on each individual. A fat smoker may live to see 90 without a heart attack, but if you look at their insurance rates no one wants to take that bet without a substantial premuim. 

Life is not fair. Get over it, learn to game the system like the low lifes or move on until you're self funded.
  • September 01 2014
  • 1Yes

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The question wasn't ignored it was answered.
 
A person needs to demonstrate reliability AND income. You only have the reliability half.

Many people have 20+years of work history and found their skill sets are no longer desired, or the income level for their skills have diminished considerably. Seriously how can a lender base a loan on your current income when you don't have a current income?

 If you don't like the  answer .....oh well
 
  
 
  • September 01 2014
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Profile picture for wetdawgs
I am not ignoring the question, but the central theme here is that you think that you should be able to get a mortgage without having an income.   The lenders disagree with you both here and apparently in person.  So, what is the logical next step?  Finding a job.... hence the question, how is your job search going? 

You have been giving many choices for moving before finding a job, you've apparently rejected them all. So, why not take the bull by the horns and start looking for a job?   Otherwise, you're demonstrating a very fine temper tantrum.   Are you having fun having a temper tantrum?

Banks can't predict layoffs and other magical predictions, but they know an employed person today is less risk than an unemployed person.   



  
  • September 01 2014
  • 4Yes

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Profile picture for WhimseyWoman
Thanks for continuing to completely ignore the questions. Are you having fun?
  • September 01 2014
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Profile picture for wetdawgs
How's the job search at your target location going?




  • September 01 2014
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And no job, right?

  • September 01 2014
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Profile picture for WhimseyWoman
Are banks able to magically predict layoffs, acquisitions, retirement? That would be amazing, and a far more valuable skillset than what they're selling now. Does anybody else remember being able to save money and actually ACRUE interest??

How can a person possibly demonstrate reliable future income when no company anywhere offers employees guarantees? Everything is at will nowadays.

I did specifically list the things separate -- No debt AND excellent credit (above 790)
  • September 01 2014
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A, Having no debt doesn't always mean excellent credit, if you haven't been maintaining debt continuously ,that can in some cases, works against you. 

B. You left out income??? This is kind of important in a loan.

Have you actually applied some place?, What did they say?
 
  • August 31 2014
  • 1Yes

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Profile picture for SoCal Engr
...not sure why I was hoping posting something under the mortgage heading would encourage people who are mortgage brokers to provide insight. My mistake.

I find this to be somewhat of a disingenuous comment, coming from the person who posted here to a question posted on...wait for it...the "Mortgage" forum.

Seriously though, there will always be a variety of answers, from a variety of sources. Each person brings their own experiences, biases, and goals to the question/answer process. Hopefully, there will be a consensus answer, but even a "consensus answer" doesn't necessarily apply to all situations.

The Internet provides ready access to a wide variety of information sources, and the ability to anonymously post questions to a wide spectrum of opinions/experience is quite incredible, but still requires the asker to overlay the responses with their own reasoning. What I don't quite understand is the castigation of responses that run counter to what one wants to hear. Most of the time, these are the voices one actually needs to hear and process.

Cheers
  • August 31 2014
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Profile picture for blank screen EXILED
"Unless you are on the level of the Kennedy's or Warren Buffett, the lender is going to verify your income." -

No-doc's loans are still available to other people as well.  But due to the abuse in 2002 through 2008, they are much harder to find and to qualify for.  Long term self employed can probably get a no-docs loan with sufficient other assets and large down payment.  But the lender would still probably require an IRS 4506T form for obtaining 2 years of income tax return transcripts from the IRS.  No-Docs does not mean the lender just believes anything a potential borrower claims.

But "self employed" is entirely different than W2 income.  And if there isn't 2 years of history with a self-employed business, this likely would not get one anywhere.
  • August 31 2014
  • 1Yes

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- The wide variety of answers is not indicative of an absence of verifiable fact, it signifies widespread ignorance that is rampant in the profession. 

I don't know, I think most professionals know the correct answer.
  • August 31 2014
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Profile picture for wetdawgs
What does a VA loan with 0% down and verified income have to do with a situation with no verifiable income?  
  • August 31 2014
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Profile picture for BrutallyHonest
Not only does VA Verify income it requires residual income, which makes a ton of sense.
  • August 31 2014
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Profile picture for aw hbeach
Still I've seen that $714,000 mortgages are issued with no down payment. Maybe it was the VA loan, but fact is that the person was able to get mortgage with no down-payment.
  • August 30 2014
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Profile picture for Brookstone Mortgage
"Factual? Based on the wide variety of answers received here and on other boards, there are no facts. Only tons of opinions and various definitions of what little laws and rights are in place."
--------------------
The wide variety of answers is not indicative of an absence of verifiable fact, it signifies widespread ignorance that is rampant in the profession. 

As with most things in life, there is a correct answer, you just need to ask the right person the right question to get it. The OP has not given enough information with which to form a factual basis for an answer. 

If they really wanted an answer, they would have emailed one of the 3 lenders that responded to this thread and given them more information with which to intelligently respond. I imagine the question wasn't really a question at all, but rather just a vent; we all need one now and then.
  • August 30 2014
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Profile picture for WhimseyWoman
Factual? Based on the wide variety of answers received here and on other boards, there are no facts. Only tons of opinions and various definitions of what little laws and rights are in place.

If there were a solid answer to anything in this ridiculously shady business of real estate and real estate lending, there wouldn't be such a wide variety of answers/opinions about any given topic posted anywhere on these and other similar forums.

So sorry I couldn't satisfy your need for a "best answer" or "thumbs up"
  • August 30 2014
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In reading through the comments, the story has become much clearer. Unless you are on the level of the Kennedy's or Warren Buffett, the lender is going to verify your income. If you want to move, stay with the job you have until you get a new one. Lenders are not going to just give you a mortgage because you've shown you have been responsible all your adult life but don't currently have a job especially since it's extremely hard to find one. This isn't pre-2008 when jobs were plenty and mortgage rules weren't followed.
  • August 28 2014
  • 2Yes

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Profile picture for zuser20140822111401119
First of all the Mortgage Lwnder/Broker that you choose to use is the entire key to this answer. Theborrowe who has the 30% down payment and good credit confuses me to some point. The only few answers that I can share with you is that perhaps the property does not satisfy or meet the Lenders standarda.  Thia more often then some one thinks can very easily become the problem is just about any home purchase.  In most cases the purchase will not completely die and get totally called off for both parties however usually in a situation like this some one has to come us with a substantial amount of money in order to cure the issue with the property before the bank agrees to close or settle on the loan. This could be one answer that no one cares to share with anyone and perhaps a neighbor or relative is coming to this conclusion before verifying the actual facts of the transaction. On the other hand the other borrower could have secured the perfect mortgage lender for them who was very willing to work on getting the loan closed. By this I mean they would work on the borrowers marginal credit to bring it up to meet an acceptable standard to the Agencies. At the same time they could have been patient and waited for their customer to perhaps correct any credit blemishes that they may have had or waiting for them to save the amount of money needed in order to close or complete the purchase of the home.. This is why I always stress to everyone to be certain that they select a reputable mortgage lender so that they have a company in their corner who is willing to work with them in order to close the purchase eventually, Please remember to use referencesm
  • August 28 2014
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Profile picture for blank screen EXILED
"I didn't realize the people answering wouldn't be actual loan officers." -

Really?  After 95 contributions on the forum, starting in the beginning of May?  Surely you have read enough threads to know that you will be getting a variety of opinions from a range of different experiences and specialties?

I just hope that you are not the "Jane" you are referring to in the 3rd person.  As already posted, if one is laid off or quits right before planning on purchasing, you only have a handful of options:
1) Rent until one is established in the new job.  As long as in the same profession and no significant time gaps, the prior income history would still be able to be used in the Underwriting.
2) Take out the loan against other assets and not the purchase.  (Some wealthy do "pawn shops" for short term loans)
3) Do unsecured loans at substantially higher interest rates.
4) Buy something smaller all cash.
5) Get friends or family to donate or loan the money.  (Many homes in San Marino are purchased all cash by their extended families gifting the money... And then when it is someone elses turn, they pay towards someone elses purchase.  This has completely broken the racial segregation that was otherwise occurring; but other ethnic groups have still not broken in as they don't use this method).
6) Get another cosigner on the loan.
7) Get the prior employer to take one back until the relocation is finalized and one has worked at a job transfer arrangement.
8)  Find other sources of "income"  The wealthy don't base it on "employment" at all, but their other investments.  The "retired" base it on their required minimum distribution, or other distribution amount that they have set up.  The disabled base it on their disability checks, regardless if from the government or private insurance.
9) Live with friends or relatives until one is established in the new area and has a new income history established.
10) Forget the "house" and do the "John Muir" thing.

Surely one must have received some council from agents, lenders, friends, relatives, employers, tax consultants, prior to loosing the job?  Surely if one was selling to relocate, one would have been warned about financing issues in a new location with no income?
  • August 27 2014
  • 4Yes

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Profile picture for SoCal Engr
When did a job become the one thing? (WAIT do not answer that. If I had a way to delete this whole thread, I would. I didn't realize the people answering wouldn't be actual loan officers.)

Fortunately, you don't have to rely on the great unwashed masses. Two lenders have actually responded and, interestingly enough, one actually addressed your last question.

"It is now practically illegal to loan money without verifying income for the borrower. Even if they have assets equal to 20 times the purchase price."
  • August 27 2014
  • 3Yes

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Profile picture for wetdawgs
I needed a good solid chortle this morning.   Good thing I don't have coffee in hand!

  • August 26 2014
  • 1Yes

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Profile picture for blank screen EXILED
There are so many ways to skin this, I wouldn't even know where to begin...

The government has offered "hand-outs" to the poor and low income since at least the 1930's, but they are all "traps" to keep one poor and low income.  HUD's beginnings was in 1934 with the House & Home Financing Agency after the passage of the National Housing Act, but didn't become a Cabinet Department until 1965 with the passage of the Civil Rights Act, and passage of the U.S. Fair Housing Act as follow up to implement parts of the Civil Rights Act.  Even then, the government took steps to make sure that discrimination could still legally occur and that segregation of American communities would remain.

And the Government has always offered even more "hand-outs" to the wealthy and corporate handouts.  So singling out low income handouts seems a bit myopic.

And if one knows how the system works?  They don't pay interest at all.  The creditors just loan the money at "no interest" and keep offering more, expecting the vendors to pay instead.

Certainly changing jobs is "no big deal" if one knows how the system works.  You get the loan before changing jobs!  And if moving large, you stay in the same industry and get a letter of commitment from a new employer before leaving the present job.  The history in the same industry with a commitment letter is fully sufficient for the underwriters.

As with most things in life, it is all "timing", and who and what you know.
  • August 26 2014
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Profile picture for BrutallyHonest
Love IT!

When the answer you get, although factual, isn't what you like....

  • August 26 2014
  • 5Yes

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Profile picture for WhimseyWoman
...not sure why I was hoping posting something under the mortgage heading would encourage people who are mortgage brokers to provide insight. My mistake.

Anybody can lose a job at any moment. There is no such thing as job security. "Bob" has a job currently and has had it for quite a long time, but he and his sig-o would like to move to a completely new location.

When did a job become the one thing? (WAIT do not answer that. If I had a way to delete this whole thread, I would. I didn't realize the people answering wouldn't be actual loan officers.)
  • August 26 2014
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Profile picture for wetdawgs
No one said "less reliable".  Get a job, and there will be no problem.

The "I'm special" card worked very well 10 years ago.   The rules of the game have changed. I'm sure a hard money lender would consider your situation if you refuse to rent.    It sounds like there is no problem with the finances of staying in an extended stay hotel for a month or two.   Heck, we prefer to rent for the first six to 12 months so we get to know the area. 

Good luck with your move.
  • August 25 2014
  • 2Yes

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