grafmiata wrote:
Alot of good points to consider. Just trying to arm myself with as much info as possible before I meet with my lawyer.
A couple things... First, definitely going to have a no-penalty clause for early payoff. Plan is to pay the balance off in 2-1/2 to 3 years. Also, the owner is a single guy, so that eliminates the divorce scenario.
Mortgage is out of the question due to the non-dwelling nature of the property. Not interested in the house, and i have zero time to devote to the hassles of being a landlord.
There is also a motocross track across the street, so any potential purchaser of the house will have bigger headaches than me running an air compressor on a Sunday afternoon.
And, the property is a corner lot, so road frontage on two sides. House and rest of the property are on a separate driveway.
The guy is not married at this moment, but what about tomorrow, the day after or any time before you pay it off.
Mortgages are done on all kinds of properties. It's the normal way to buy property.
If you can pay it off that quickly, it must not be a huge amount. Have you perhaps asked your bank for a personal loan? That way, you immediately become the titled owner of the property and the vast majority of your headaches disappear.
Curmudgeon wrote:
If you can pay it off that quickly, it must not be a huge amount. Have you perhaps asked your bank for a personal loan? That way, you immediately become the titled owner of the property and the vast majority of your headaches disappear.
No, it's not a huge amount... 300k is the number I have in my head, so just chump-change.
But seriously, my bank won't touch this... The whole reason I'm looking at land-contract is due to the fact that I "did the right thing" many years ago.
Long story short, years ago I ended up with alot of debt due to my fiance` at the time. After dumping her, it took several years to bail my ass out. Did everything I could, but my CR took some major hits.
Once I got myself above water, I really started to enjoy being "debt-free". Been paying cash for everything for the past 15 years, and enjoying it.
Now, at 46, I don't have "bad" credit, I basically have "zero" credit. I've known this for awhile, and it's worked for me because I was not looking to buy property.
Now, I am... The price that the owner is asking is roughly a third of my annual income. Despite being able to put half-down on this, the bank is not interested in helping.
See a mortgage broker. They are far better equipped than "the bank", especially on stuff that is out-of-the-box "normal".
mtn wrote:
grafmiata wrote:
No, it's not a huge amount... 300k is the number I have in my head,
*snip*
The price that the owner is asking is roughly a third of my annual income.
What do you do?
I spend too much time at work...
The 300k thing was a joke. My idea on the place is 30k, seller is thinking 35.
PHeller
UltraDork
1/31/13 7:02 a.m.
A canoe that is gulp actually helpful?
mtn
PowerDork
1/31/13 7:26 a.m.
grafmiata wrote:
mtn wrote:
grafmiata wrote:
No, it's not a huge amount... 300k is the number I have in my head,
*snip*
The price that the owner is asking is roughly a third of my annual income.
What do you do?
I spend too much time at work...
The 300k thing was a joke. My idea on the place is 30k, seller is thinking 35.
Gotcha... Well, do you have any siblings/parents/rich uncles who would co-sign a loan with you?
Hokay. If he's asking 1/3 of your income, you are paying 50% down, that means the balance is now 16.5% of your income. The bank still won't bite on that?
Curmudgeon wrote:
Hokay. If he's asking 1/3 of your income, you are paying 50% down, that means the balance is now 16.5% of your income. The bank still won't bite on that?
There are things that simply cannot be done nowadays regardless of income or downpayment.
Effective January 2014 it gets even worse when the new Qualified Mortgage rules go into effect. The QM rules apply only to residential mortgages so wouldn't affect this particular deal but if any of you are putting off buying a home till next year - don't! Do it this year.
Hell for this much buy it on a 0% credit card and pay it off ASAP. I know someone who's bought two houses that way in the last 3 years and paid them both off. They after the fact took out a mortgage on the 1st house once they'd done it up (out of their own pockets) and used that to do up the second house.
I refuse to believe even with a low credit score if you walk into a bank, or better a credit union and show them your finances you can't get a loan of some kind for this. Even if they rape you on the interest rate, something outrageous like 8-10%, it's still a small amount and I'm sure once you've paid it down for a year you could easily re-fi into a better rate. We've just got 2.99% on a 15 year. Money is ridiculously cheap right now.
Adrian_Thompson wrote:
Hell for this much buy it on a 0% credit card and pay it off ASAP. I know someone who's bought two houses that way in the last 3 years and paid them both off. They after the fact took out a mortgage on the 1st house once they'd done it up (out of their own pockets) and used that to do up the second house.
I refuse to believe even with a low credit score if you walk into a bank, or better a credit union and show them your finances you can't get a loan of some kind for this. Even if they rape you on the interest rate, something outrageous like 8-10%, it's still a small amount and I'm sure once you've paid it down for a year you could easily re-fi into a better rate. We've just got 2.99% on a 15 year. Money is ridiculously cheap right now.
Money may be ridiculously cheap, but it's also ridiculously tough to get. The rules have tightened up so much there are simply many loans that can't be done.
The regulators watch banks and mortgage companies and scrutinize every transaction. If they cross the line, and I'm talking fine print type of stuff even, the bank officers, loan officers & underwriters involved can go to jail so NO not every loan can be done.
mtn wrote:
carguy123 wrote:
Curmudgeon wrote:
Hokay. If he's asking 1/3 of your income, you are paying 50% down, that means the balance is now 16.5% of your income. The bank still won't bite on that?
There are things that simply cannot be done nowadays regardless of income or downpayment.
Effective January 2014 it gets even worse when the new Qualified Mortgage rules go into effect. The QM rules apply only to residential mortgages so wouldn't affect this particular deal but if any of you are putting off buying a home till next year - don't! Do it this year.
Go on...
What he said... I own my house free and clear but may want to mortgage it later this year. So I'm not exactly buying it.
Curmudgeon wrote:
Hokay. If he's asking 1/3 of your income, you are paying 50% down, that means the balance is now 16.5% of your income. The bank still won't bite on that?
The problem is that the loan amount is too small - this came up recently a bunch of times on Clark Howard's show with people calling in who wanted to refi their house to get a better rate but the bank didn't want to know because the amounts involved were too small.
Even as a personal loan? Reason I ask, I had a PLOC (Personal Line Of Credit) which I used to buy the Rodeo I had, I paid it off quick but kept it in reserve 'just in case' mostly because it was a fixed rate. I closed it a few years ago because the 'just in case' never materialized. That wasn't connected with a mortgage, credit card etc in any way.
OK, but go google Qualified Mortgages (QM) & Qualified Residential Mortgages (QRM) because you won't believe me.
And by the nature of the beast it is political. Just about everything to do with the economy nowadays is political. You may not like it, but it is and you have to have a little history for it to make any sense at all.
Nope I can't do it. I just erased about 20 minutes of work. As Adrian said "I refuse to believe" and it will become a E36 M3storm of political stuff.
Google it.
Let's just say that the QM rules require lenders to tighten underwriting guidelines, lower qualifying financial ratios and raise your interest rate if you don't meet certain standards.
Standards that, if they aren't changed, can only be met by the top 10% of Americans.
And yes a loan can be too small to do. For residential mortgages anything under 50K gets hit by some severe penalties and most lenders won't even do them.
I am working with a group of small banks who have gotten out of the mortgage business and the 90 day note business (PLOC) due to the new regs in the Dodd-Frank act.
OK, another tack. Do you own your current residence? Can you get a home equity loan on that and use that money to buy this place?
We have Engineers, accountants, Lawyers, publishers, surveyors, structural engineers, every profession known to man on her (except maybe the oldest profession) Haven’t we for the love of mythical deity got a banker on here that can help out?
Adrian_Thompson wrote:
We have Engineers, accountants, Lawyers, publishers, surveyors, structural engineers, every profession known to man on her (except maybe the oldest profession) Haven’t we for the love of mythical deity got a banker on here that can help out?
Who says we don't have members, or ex members, of the oldest profession.
From the quickie Google I did, the 2014 and later QRM rules should not hurt me. But I think I'll get it done sooner than later, just to be on the safe side.
They will hurt everyone because everyone will be pulling back from present day standards. Many loan types will no longer be available.
The secondary market will cease buying many present day situations. It's the biggest thing to hit mortgages since the inception of mortgages.
In case you hadn't realized it, the portion of the Dodd-Frank Act that pertains to lending & banking was written by attorneys from 2 of the Too Big To Fail Banks. They wrote in the need for lenders to maintain a 5% cash escrow of every loan they fund. That means anyone except the biggest will have to be super selective of who they lend to because soon they will be out of money to lend. It will all be tied up in the escrow account.
It is presently putting many if not most rural & small banks out of much of the lending business. I'm presently working with a consortium of small banks that are trying to find a legal way for me to do all their mortgage business. In many cases their towns and customers no longer have access to mortgages without a long trip into a big city.
Mortgages are not something that you can do as well online as you can in person.
Hal
Dork
1/31/13 5:58 p.m.
grafmiata wrote:
My idea on the place is 30k, seller is thinking 35.
The price that the owner is asking is roughly a third of my annual income. Despite being able to put half-down on this, the bank is not interested in helping.
If I am doing my math right, you are looking to borrow ~$17K with an annual income of ~$90K. If that is true you should be looking at personal loans or lines of credit rather than mortgages. Banks have always been reluctant to do mortages on land without a dwelling. Back in 1972 I had to get a personal loan to buy a building lot since I wasn't going to build on it immediately.
