Friday, September 18, 2009

Mortgage Complications

I'm learning more and more about mortgages each time we can't get one. After looking at those houses last weekend, we decided we liked the latter one, on Courtney Avenue. It's an AMAZINGLY well maintained house with original floors, moldings, fireplaces... We loved it! The basement was clean and usable. Nobody had painted over the stair banister. The copper was still in place. As Eddie joked to our wonderfully wonderful realtor, Chris, it had us at "you-don't-need-a-drill-to-get-in" and "you-can-walk-around-without-flashlights."

Then...the mortgage. We talked to three new banks (not Wells Fargo, the one that approved us for our loan that we ended up not taking). All of them said that it looks like we would not qualify for a loan (although we would need to actually apply for pre-qualification before they could reject us officially).

This house costs $15,500
less than the other house and we are going to lay down 20% for this house rather than just 3% for the other house. So, technically, if we had gotten a loan for the other house, getting this one should be a piece of cake. The most informative person in the whole process was Keith at HVFCU. He kept plugging in numbers for me so we could troubleshoot our loan-worthiness.

It turns out that Wells Fargo was possibly very forgiving and allowed us a higher debt-to-income ratio than other banks would have because they assessed and took into consideration the increased value of the house after our renovations. Those few percentages of allowed ratio make a big difference. The difference, for us, between a 45% debt-to-income ratio ($45 per $100 of income we could spend on mortgage) and a 50% dti ratio is about $90,000.

The higher down payment you're willing to lay out and the better your credit score also bumps up those percentage points. If you have a credit score less than 720, you automatically have to pay an origination fee of .5% of your mortgage. So, it makes sense for us to take some money that we had saved to pay down our debt, and hopefully increase our credit score and lower our monthly debt expenses.

Well, the point of all this, is, I think the property (pictured in this post) we were all set to buy in June, and had a mortgage for, is now back on the market. I just saw it relisted on the CitiMortgage website, but that could be a glitch in their machinery. I hope not. If we can, we're going to buy it. With a straight mortgage and renovation loan and cross our fingers that the magic of its numbers still work.

Friday, September 11, 2009


Ah, fall. When the slate is clean, again. Well, we pressed the rewind button, and we're where we were exactly a year ago. Eddie just found a job and we're attempting to buy a house. The only difference is that I'm in a social work program and now I have an internship on weekends, so I don't have any time to spend on a fixer-upper. We'll have to look at houses that are move-in ready. In many ways, this makes the prospect of buying a house less exciting.

One of the two properties we're going to look at tomorrow:

Unfortunately, it's not move-in ready, as our realtor revealed to us only after we decided it's perfect for us. It needs new plumbing and electrical wiring, but we're going to take a look anyway since it's in a great location (river views!!!).

Then the second place is only a few blocks away:

Anyhow, we're back in the market!!