NOTE: This is a migrated entry.
So recently I decided to take the plunge and buy a house out here in San Diego. After such an educational experience I figured I would post something here in the hopes it is of use to others in similar situations.
I figured I would cheat the system a bit and get the financing squared away first so I didn't have to fight after the fact. I selected Chase, somewhat by accident, and went through the trouble of getting pre-approved for a rather limited amount. I really think underwriting policy needs to be edited; instead of using score thresholds to determine whether you can do an automated underwrite or not, I think it should be based on all factors considered: how much net worth the buyer has, how long they've been in the same company/position, purpose for buying, etc. The days of manual underwriting really need to come to an end, and pool those resources towards clearing out the short sale backlog.
I also think FHA's DTI is not properly adjusted to compensate for the human element: in other words, it assumes you can't afford certain levels of mortgage payment, even though that customer may be paying that or more in existing rent payments without a problem (meaning the calculation is not accurate for that specific customer). I think 50% of adjusted monthly income (AMI) is more appropriate.. AMI works like this: If I make $70k/year, I make $5833.34/month (70k divided by 12). That compensates for the irregular pay periods of some companies and allows a customer to use their true buying power. If they did that little bit, my buying power would (potentially) double, and I'd really lose no more money in the long run.
Some might disagree with that logic, thinking it's overstating income, but it isn't. That would account for the amount of money I really do make. If there's only two pay periods in the month of May and three pay periods in the month of June, and another two pay periods in the month of July, it's the same amount of income as if there was one check a week.
Anyway, I digress.
I finally chose a home that seemed within my price range, assuming grant funding, and made my offer. The bank increased the money they wanted for the home slightly and played with the numbers so they were not paying any more than they felt they should have been under any other circumstance. Great for them, bad for me...because it was $5000 outside of my buying power. My agent suggested I consider a mortgage broker with whom he was acquainted - and I will say that while that broker seems to be getting the job done, his attitude leaves a LOT to be desired. Note to readers: do not let anyone force you into signing blank forms. If you get forms that aren't filled out, make them fill them out, or give you the information so you can review it. Of course, me being an auditor, I already knew this and was ready to call him out.
Current status: I'm waiting to hear back from the broker on the final underwriting. It's really the only piece that's holding me back from closing on the house I chose. It's hard, because while I no longer have a rent payment (I gave notice earlier in the month...even if the house doesn't pan out, I've got to get out of the place I'm at), I have to have cash on tap for such things as inspections and insurance and whatever else might come up, never mind that I still have to eat and put gas in my car.
Update: One lender dropped...three more to go. Let's see which lender is smart and which are short-sighted.
Update 2: OK, so the initial lender isn't quite "dropped" per se. See my message on Consumer Credit for more information, but they're in a limbo state. The broker is dealing with a different bank who claims to be more flexible on things like this. Fingers are crossed.
Update 3: Just got a packet from the first lender with some good faith documents. I left a VM for my broker (see my Consumer Credit posting). I think come Monday, I'll have some good news!
