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Posted by on June 26, 2008, 6:05 pm
A few months ago I asked about getting a mortage from an individual
(typically a family member) rather than an institution. One reason to
keep a loan "within the family" is to save money. Another one is that
mortgage lenders are a nuisance, in my experience. It appears that
they don't do any work to process the loan until about a week before
closing, at which time they may suddenly make demands. For a Wednesday
closing, I was only told on Tuesday about 2pm what the exact amount
due was. The lawyer who sent me the HUD statement (which lists all the
costs in the real estate transaction) never sent it to seller's
realtor, and when they arrived at closing, they were shocked to see
that they were paying $8000 more in fees than the expected. There was
an error in the HUD, which would have been corrected earlier if they
had seen it. Correcting the HUD at the time of closing required
approval of the lender. The closing took about 4 hours, including a
change of venue so that documents could be reprinted.
I'd like to buy my next house for cash, and if I want to exploit my
home equity and the mortgage interest deduction, I should be able to
take out a first lien mortgage, without any time pressure, after I
have purchased the house. This may be an unrealistic goal, but I think
avoiding the stress of dealing with a mortgage lender near a closing
may be worth a few thousand dollars. I'm not against lenders doing
their due diligence and verifying income, assets, and home value, but
they should do their underwriting ahead of time.
Not really asking for advice, just venting.
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Posted by on June 27, 2008, 12:04 am
On Jun 26, 3:05 pm, beliav...@aol.com wrote:
> I'd like to buy my next house for cash, and if I want to exploit my
> home equity and the mortgage interest deduction, I should be able to
> take out a first lien mortgage, without any time pressure, after I
> have purchased the house.
Congratulations on being able to pay cash. In California purchase
money mortgages are "non-recourse" to your other assets in case of
default. Refi mortgages are "recourse" to your other assets. Not
that there is any chance of your house going down in value.
Escrow turned my $8,331 mortgage payofff into an $833,100 payoff.
Without blinking they asked me to bring over $200,000 to closing to
give my house away for nothing. If they didn't notice this, I'll bet
they would never notice a couple thousand dollars of errors. Funny
how so many people are good at making errors in their favor. I wish
there was some cheap service to check for mistakes and junk fees.
I'd bet they would find some.
After asking the ATT cable salesguy if the price was complete and
total three times, I found an additional $10 a month "HD technology"
fee on my first cable bill I was never told about. The nice phone rep
said that they would drop it if I canceled all the HD channels
included in the package. GRRRRR...
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Posted by PeterL on June 27, 2008, 11:42 am
On Jun 26, 9:04 pm, camg...@att.net wrote:
> On Jun 26, 3:05 pm, beliav...@aol.com wrote:
>
> > I'd like to buy my next house for cash, and if I want to exploit my
> > home equity and the mortgage interest deduction, I should be able to
> > take out a first lien mortgage, without any time pressure, after I
> > have purchased the house.
>
> Congratulations on being able to pay cash. In California purchase
> money mortgages are "non-recourse" to your other assets in case of
> default. Refi mortgages are "recourse" to your other assets. Not
> that there is any chance of your house going down in value.
Hello? Houses are going down in value all over Calif. If you bought
your house in the Central Valley within the last 2 years you are very
likely under water.
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Posted by Ron Rosenfeld on June 28, 2008, 10:41 am
On Thu, 26 Jun 2008 17:05:10 -0500, beliavsky@aol.com wrote:
>
>I'd like to buy my next house for cash, and if I want to exploit my
>home equity and the mortgage interest deduction, I should be able to
>take out a first lien mortgage, without any time pressure, after I
>have purchased the house. This may be an unrealistic goal, but I think
>avoiding the stress of dealing with a mortgage lender near a closing
>may be worth a few thousand dollars. I'm not against lenders doing
>their due diligence and verifying income, assets, and home value, but
>they should do their underwriting ahead of time.
>
Being able to buy for cash puts you in an enviable situation.
I've not had the problems you've described in buying about six houses, so
far. The mortgage lenders have always supplied me with information
sufficiently far in advance, and I've never had any surprises at the
closings.
Maybe it's because the lawyer has always been one of my choice? It's
always been my personal lawyer who has also been authorized to process the
documents for the lender, so maybe he's looking out for me more so than a
bank appointed lawyer?
Maybe it's because I review all the documents in detail as soon as they are
available?
Maybe I've just been lucky?
The last house we purchased I almost purchased for cash, because the bank
with which I was dealing threw in some clinkers towards the end of the
process. I basically told them to put their deal where the sun don't
shine, and the seller was willing to accept my pledge to pay cash if I
didn't come up with an alternate lender. (That can be an issue, also, as
the seller may not want to take his house off the market without some real
good indication that you have the resources to purchase it).
--ron
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Posted by Mark Bole on July 2, 2008, 10:55 am
beliavsky@aol.com wrote:
> Another one is that
> mortgage lenders are a nuisance, in my experience. It appears that
> they don't do any work to process the loan until about a week before
> closing, at which time they may suddenly make demands.[...]
At a simple re-finance closing a few years back, the escrow people made
an error in my favor of $500. Although I voluntarily paid it back, I
charged them a $30 processing fee. Since the whole point of hiring an
escrow service is to avoid errors, it seems they should be more accountable.
> I'd like to buy my next house for cash, and if I want to exploit my
> home equity and the mortgage interest deduction, I should be able to
> take out a first lien mortgage, without any time pressure, after I
> have purchased the house.
There is some time pressure, basically 90 days. Otherwise, the the loan
proceeds are equity debt, not acquisition debt, so the mortgage interest
tax deduction is subject to various extra limitations.
-Mark Bole
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to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
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