Rant about relocation mortgage assistance, and a question

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TomatoTomahto
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Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 9:55 am

We are relocating for my wife's new job, and the new company will cover some amount of relocation expenses. We will be purchasing our new home before selling our old home, so we thought that a mortgage would be helpful to bridge the gap. Round numbers, we're buying a $2M home and selling a home for $1.5M. The basis on the old house is roughly $1.9M.

We quickly found out that a jumbo mortgage, even with a 40% down payment, wouldn't work. The mortgage company told us that "there are no exceptions, but a jumbo mortgage requires 3 paystubs from the new company and then a month for underwriting," so that would mean that the mortgage wouldn't be given until 2-3 months into our new location. Useless 3 paystubs from the old company and a copy of the offer letter from the new company wouldn't do; no exceptions.

So, we applied for a conventional mortgage. A 30 year, with a maximum loan amount of $600k. So, a staggering Loan to Value. It should be a piece of cake. We can't get a solid answer when the loan will be approved. They will still do an appraisal ("you wouldn't want to pay more for the house than it's worth, would you?") They are making us jump through hoops to prove that we will be insuring the new house (really? I am stupid, but not insane). They want proof, twice, once now and then once 10 days before closing, that the employment offer still stands from the new employer (really? you have a copy of the offer; do you think we're uprooting our household for an offer that isn't solid?)

Anyway, we are done with the mortgage company. We are going to pay cash. We have sold enough in our taxable account to leave us $600k short of the total cost of the house. That generated some capital gains, but the next tranche of sales will be more painful. I don't mind resetting the basis, in principle, but since this is money that will probably be inherited (by kids or charity), it seems wasteful. We could take out some loans against two 401ks, but that's limited to $50k (each?).

Is there anything in the new tax law that changes the situation? I'd love to offset some capital gains in equities against a capital loss on our home, but from what I understand, that's not possible unless our old home was an investment property, which it wasn't. Any other ideas?

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unclescrooge
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Re: Rant about relocation mortgage assistance, and a question

Post by unclescrooge » Thu Feb 15, 2018 10:01 am

What profession are you in? Some have relaxed lending guidelines. Also, some private banks have special lines of credit, based on your assets custodied with them.

Morgan Stanley sends my wife letters offering to loan her up to $1mm against her (non-existent) stock portfolio at less than 3%.

You could also try a hard money bridge loan. I recently borrowed nearly $1mm at 12%. Only requirement was you put down 30%. You can refinance out at any time.

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 10:46 am

unclescrooge wrote:
Thu Feb 15, 2018 10:01 am
What profession are you in? Some have relaxed lending guidelines. Also, some private banks have special lines of credit, based on your assets custodied with them.
I’m a retired Stay At Home Dad (the nest emptied). My wife works in tech/banking. We have avoided any private banking relationships.

Morgan Stanley sends my wife letters offering to loan her up to $1mm against her (non-existent) stock portfolio at less than 3%.

You could also try a hard money bridge loan. I recently borrowed nearly $1mm at 12%. Only requirement was you put down 30%. You can refinance out at any time.
i would consider that if I knew that my house would sell quickly. 12% is rough when compared against 20% of LTCG (say, maybe 40% of withdrawal, so effectively 8% and I get to reset basis). If I knew that I’d retire the loan in a couple of months, I would do it.

Jack FFR1846
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Re: Rant about relocation mortgage assistance, and a question

Post by Jack FFR1846 » Thu Feb 15, 2018 10:56 am

How about renting in the new location for a year? This should remove all the hoops the mortgage provider is putting in front of you.

While you think the job offer requirements are unreasonable, I've worked for a company who hired someone, they relocated, a downsize and layoff hit the company and the new guy with a month on the job and a house he closed on a week ago were handed a pink slip. This does happen.
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an_asker
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Re: Rant about relocation mortgage assistance, and a question

Post by an_asker » Thu Feb 15, 2018 10:58 am

TomatoTomahto wrote:
Thu Feb 15, 2018 9:55 am
[...]The mortgage company told us that "there are no exceptions, but a jumbo mortgage requires 3 paystubs from the new company and then a month for underwriting," so that would mean that the mortgage wouldn't be given until 2-3 months into our new location. Useless 3 paystubs from the old company and a copy of the offer letter from the new company wouldn't do; no exceptions.

So, we applied for a conventional mortgage. A 30 year, with a maximum loan amount of $600k. So, a staggering Loan to Value. It should be a piece of cake. We can't get a solid answer when the loan will be approved. They will still do an appraisal ("you wouldn't want to pay more for the house than it's worth, would you?") They are making us jump through hoops to prove that we will be insuring the new house (really? I am stupid, but not insane). They want proof, twice, once now and then once 10 days before closing, that the employment offer still stands from the new employer (really? you have a copy of the offer; do you think we're uprooting our household for an offer that isn't solid?)

Anyway, we are done with the mortgage company. We are going to pay cash. We have sold enough in our taxable account to leave us $600k short of the total cost of the house. That generated some capital gains, but the next tranche of sales will be more painful. I don't mind resetting the basis, in principle, but since this is money that will probably be inherited (by kids or charity), it seems wasteful. We could take out some loans against two 401ks, but that's limited to $50k (each?).

Is there anything in the new tax law that changes the situation? I'd love to offset some capital gains in equities against a capital loss on our home, but from what I understand, that's not possible unless our old home was an investment property, which it wasn't. Any other ideas?
I have two chains of thought going here:

1) How many mortgage companies did you meet with? Surely they cannot all be as rigid?

2) Maybe it is a good thing that mortgage companies are being so strict - that keeps the housing market from reaching lofty heights of fancy like they did over a decade ago!

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eye.surgeon
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Re: Rant about relocation mortgage assistance, and a question

Post by eye.surgeon » Thu Feb 15, 2018 11:05 am

I would second the recommendation to consider renting for a few months. New jobs, even for highly compensated professionals, don't always work out. You may not want to buy a 2 million dollar home without your wife dipping her toes in the location and job for a few months. That's the reason for the 3 paystub rule.
Last edited by eye.surgeon on Thu Feb 15, 2018 11:24 am, edited 2 times in total.
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doon
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Re: Rant about relocation mortgage assistance, and a question

Post by doon » Thu Feb 15, 2018 11:15 am

About 5 years ago when I needed a mortgage loan with an s-corp that was only 1 year old, I had to jump through hoops to qualify for jumbo loans. My need was much more modest of $650K. In the end I ditched all the traditional mortgage providers and called a lot of smaller banks with portfolio loan product.

I was able to get my loan through a really small bank (2 branches) at prevailing market rate of about 3.6 %. I had to call about 30-40 banks to differentiate the good ones from the bad.

There is a vast discrepancy in the type of portfolio products that different banks provide. So you have to be careful about it.

This was in NJ and I used this list to call each bank alphabetically.

http://www.state.nj.us/dobi/bankwebinfo.htm

Hope it helps!
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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 11:24 am

an_asker wrote:
Thu Feb 15, 2018 10:58 am
I have two chains of thought going here:

1) How many mortgage companies did you meet with? Surely they cannot all be as rigid?
We only went through one, because the relocation agreement reimburses for closing costs if you use their recommended company. We'd probably eventually get reimbursed if we went elsewhere, but there are no guarantees. I (imo stupidly) wanted a mortgage to insure that we'd get reimbursed for closing costs, but it turns out that many of the closing costs are generated by the mortgage company. The relocation will separately pay for attorney fees, title insurance, packing/moving/unpacking, etc.

2) Maybe it is a good thing that mortgage companies are being so strict - that keeps the housing market from reaching lofty heights of fancy like they did over a decade ago!In principle I don't disagree, but this was a case of us putting down something like 75% of what the home is likely to appraise for. They should say a little prayer that they have to foreclose on us :D

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 11:30 am

eye.surgeon wrote:
Thu Feb 15, 2018 11:05 am
I would second the recommendation to consider renting for a few months. New jobs, even for highly compensated professionals, don't always work out. You may not want to buy a 2 million dollar home without dipping your toes in the location and job for a few months. That's the reason for the 3 paystub rule.
We had been looking, via Zillow, for many months. It is a unique property that ticks quite a few of our boxes, and we had not seen anything that we preferred, even at 2x the price.

The new company will provide corporate housing for 3 months, but that's more usually in the city proper. Having a 95# dog doesn't make renting any easier :oops: If the job doesn't work out; I'd love to have my wife retire in this new home. For better or worse, she is stoic about work situations, and thus is unlikely to pull the escape cord. Everything we've seen about the new job makes us think that she will be profoundly happier there than in her old job.

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 11:35 am

Jack FFR1846 wrote:
Thu Feb 15, 2018 10:56 am
How about renting in the new location for a year? This should remove all the hoops the mortgage provider is putting in front of you.

While you think the job offer requirements are unreasonable, I've worked for a company who hired someone, they relocated, a downsize and layoff hit the company and the new guy with a month on the job and a house he closed on a week ago were handed a pink slip. This does happen.
The company involved is unlikely to have a systemic downsizing. Details in the offer letter would make it expensive for them to not employ my wife, at least for a year.

I think it's unreasonable since we showed the mortgage company that we had sufficient funds to cover the purchase even if my wife were not employed by the new employer. I understand that there's a process, but at some point, sanity should trump process.

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Re: Rant about relocation mortgage assistance, and a question

Post by btenny » Thu Feb 15, 2018 11:49 am

Wow. I am kinda surprised you are moving. From your previous posts I thought you were at your current spot for the long count. I guess the new job must be fantastic for your wife and a good challenge.

Regarding the home. I do not think you should buy a big expensive home at this new location. Yes I know you can afford it and both of you want a really nice place. BUT there are tons of things that are going to change and change fast for both of you over the next few years. Your kids are finally grown and moved out. You may not want the big giant home to repair and maintain ESPECIALLY in a spot where the kids did not grow up. Think about it for a minute. The kids want to come home and visit but they also want to visit their friends and their old haunts. This is not where you are moving. Where are they going to put down roots to work?

Likewise if this new job is that big for your wife there is high likely hood she will get promoted or transferred or just moved again soon. So I bet you have to move again in 3-5 years. Please set down with your wife and talk about this seriously. Really. I see this as a very big risk to your plan. So why do you want to buy a big expensive permanent home?

Where do you want to live if you BOTH retire? Is this your forever home? It seems pretty big and expensive to keep very long term. In a new location.. Seriously.....

So I suggest you find a really really nice big rental for a year or two. Do not skimp. Spend some big bucks. Then in a year or so after you sell the old house decide if you want to buy at the new location and what you want to own.

Good Luck.

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Re: Rant about relocation mortgage assistance, and a question

Post by btenny » Thu Feb 15, 2018 12:04 pm

RE. Renting with a big dog. You can buy very good renter insurance now days to offset the risk of the big dog and the related dog issues. See below. Look for single family homes from private renters or a high end rental agency. Then do not tell the landlord how big your dog is right away. Then after you find a nice place show them your $1M renter liability policy that protects everyone from damage and risk.

https://www.statefarm.com/simple-insigh ... s-the-bite

Good Luck.

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Re: Rant about relocation mortgage assistance, and a question

Post by btenny » Thu Feb 15, 2018 12:19 pm

Re the mortgage. The mortgage companies are just crazy funny about requiring steady monthly income STREAMS. They just do not care if you have the cash in the bank. They want a paycheck or annuity to prove you can afford the payment. This is double true for long term 15-30 year permanent loans.

But if you must get a loan I suggest talking to the mortgage broker about a bridge loan of 50% or so value of the new home. Tell him/her that a 5/1 ARM with a balloon at 5 years is OK as you plan to pay off the loan when you sell the old place. This type of loan is more a signature personal loan than a mortgage. These types of loans are what are used for some apartment buildings. So it requires you to pledge part of your portfolio as collateral rather than the home. This makes you responsible for the loan irregardless of circumstances. They do not foreclose. They sue you and get your money. I did this back in 2001 so I know it can be done. But your amount is large so I am not sure if it still works.

Good Luck.

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Re: Rant about relocation mortgage assistance, and a question

Post by an_asker » Thu Feb 15, 2018 12:48 pm

TomatoTomahto wrote:
Thu Feb 15, 2018 11:24 am
We only went through one, because the relocation agreement reimburses for closing costs if you use their recommended company. We'd probably eventually get reimbursed if we went elsewhere, but there are no guarantees. I (imo stupidly) wanted a mortgage to insure that we'd get reimbursed for closing costs, but it turns out that many of the closing costs are generated by the mortgage company. The relocation will separately pay for attorney fees, title insurance, packing/moving/unpacking, etc.
If that's all you are going after, I really suggest you look around - you might even MAKE money by picking a non-employer-recommended lender! Not only that, the bigger your loan, the more you will save (this is similar to me paying part of my taxes using a credit card that gives me 2% cash back - the credit card fee for making the tax payment is 1.87%!!).

For example, let's say your employer-recommended lender offers a loan for, say, $1,000,000 at 3.5% and has $10,000 closing costs (which the employer would pay). You might get a no closing cost loan for 3.25% from another lender! When I was shopping for our loan a few years ago (with aimloan if you are curious), I noticed that if I plugged in a larger loan amount, not only would the closing costs be lower (in some cases even resulting in a refund!!), but our interest rate would also go lower. We were unable to really game the system that much, as our house was not that expensive. At that time, I was wondering that it was really counter-intuitive (though it made sense when I thought about it) that larger loans resulted in lower closing costs and interest rates!

Hopefully, you (or your wife, to be precise) have not signed a clause saying that you WILL go with the employer-recommended lender.

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Re: Rant about relocation mortgage assistance, and a question

Post by smitcat » Thu Feb 15, 2018 12:49 pm

btenny wrote:
Thu Feb 15, 2018 11:49 am
Wow. I am kinda surprised you are moving. From your previous posts I thought you were at your current spot for the long count. I guess the new job must be fantastic for your wife and a good challenge.

Regarding the home. I do not think you should buy a big expensive home at this new location. Yes I know you can afford it and both of you want a really nice place. BUT there are tons of things that are going to change and change fast for both of you over the next few years. Your kids are finally grown and moved out. You may not want the big giant home to repair and maintain ESPECIALLY in a spot where the kids did not grow up. Think about it for a minute. The kids want to come home and visit but they also want to visit their friends and their old haunts. This is not where you are moving. Where are they going to put down roots to work?

Likewise if this new job is that big for your wife there is high likely hood she will get promoted or transferred or just moved again soon. So I bet you have to move again in 3-5 years. Please set down with your wife and talk about this seriously. Really. I see this as a very big risk to your plan. So why do you want to buy a big expensive permanent home?

Where do you want to live if you BOTH retire? Is this your forever home? It seems pretty big and expensive to keep very long term. In a new location.. Seriously.....

So I suggest you find a really really nice big rental for a year or two. Do not skimp. Spend some big bucks. Then in a year or so after you sell the old house decide if you want to buy at the new location and what you want to own.

Good Luck.
Wow - fantastic answer. Obviously I am not the OP but it has value to us as well - thank you

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TomatoTomahto
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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 12:50 pm

btenny wrote:
Thu Feb 15, 2018 11:49 am
Wow. I am kinda surprised you are moving. From your previous posts I thought you were at your current spot for the long count. I guess the new job must be fantastic for your wife and a good challenge. The new job is fantastic, and the new location is a win for me also. Our current spot was good for us and the kids, but I have been past my “sell-by” date for some time. My staying here was a (willing) sacrifice on my part; most of the people here are not my tribe.

Regarding the home. I do not think you should buy a big expensive home at this new location. Yes I know you can afford it and both of you want a really nice place. BUT there are tons of things that are going to change and change fast for both of you over the next few years. Your kids are finally grown and moved out. You may not want the big giant home to repair and maintain ESPECIALLY in a spot where the kids did not grow up. Think about it for a minute. The kids want to come home and visit but they also want to visit their friends and their old haunts. This is not where you are moving. Where are they going to put down roots to work?
The “salient” kid, not counting the Peace Corps kid in Fiji, or the ones still in college, appears to be settling in NYC. Countering his desire to visit his old home, there are many high school and college friends near our new city (didn’t plan it that way, but fortuitous), and the setting is much more alluring (salt water pool vs. no pool, double digit acres vs 0.6 acres, tennis court vs. no tennis court, fresh vegetables from the garden vs. Trader Joe’s vegetables, etc.).

Likewise if this new job is that big for your wife there is high likely hood she will get promoted or transferred or just moved again soon. So I bet you have to move again in 3-5 years. Please set down with your wife and talk about this seriously. Really. I see this as a very big risk to your plan. So why do you want to buy a big expensive permanent home?
We would not be surprised if she advances at her new job. She will be at company HQ, so a transfer is unlikely.

Where do you want to live if you BOTH retire? Is this your forever home? It seems pretty big and expensive to keep very long term. In a new location.. Seriously.....
I would consider this a wonderful retirement home. We might want a second home for the cold months, but I quite enjoy cold weather, so we shall see.

So I suggest you find a really really nice big rental for a year or two. Do not skimp. Spend some big bucks. Then in a year or so after you sell the old house decide if you want to buy at the new location and what you want to own.

Good Luck.
I appreciate your sincere concern that we might be jumping into something bigger than we realize. This move, and this new house, ticks so many boxes that it would concern me to pass it by. Some of the boxes:
- a serious solar farm, some small penance for my past and current environmental sins
- a commute for my wife that isn’t soul crushing
- a political environment at her job that isn’t soul crushing
- I can have chickens. Yes, chickens.
- I can grow vegetables.
- We won’t be on Newark Airport’s flight path, sirens will be rare, we won’t hear the neighbor’s landscapers all the time, and more generally, we will have reduced noise pollution
- my wife will be able to jump in a salt water pool after her runs. I will eat bon bons by the pool
- a house whose “vibe” I really appreciate, with minimal changes required (a few bathrooms need updating, some paint colors are not our taste)

And, that’s the problem with a rental. No matter how much we spend on a rental, it won’t tick any of those boxes (except for the work-related ones). We won’t know any better after a year of renting if it’s our kind of place, only whether or not she likes her job and whether her job likes her.

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TomatoTomahto
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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 12:58 pm

btenny wrote:
Thu Feb 15, 2018 12:19 pm
Re the mortgage. The mortgage companies are just crazy funny about requiring steady monthly income STREAMS. They just do not care if you have the cash in the bank. They want a paycheck or annuity to prove you can afford the payment. This is double true for long term 15-30 year permanent loans.

But if you must get a loan I suggest talking to the mortgage broker about a bridge loan of 50% or so value of the new home. Tell him/her that a 5/1 ARM with a balloon at 5 years is OK as you plan to pay off the loan when you sell the old place. This type of loan is more a signature personal loan than a mortgage. These types of loans are what are used for some apartment buildings. So it requires you to pledge part of your portfolio as collateral rather than the home. This makes you responsible for the loan irregardless of circumstances. They do not foreclose. They sue you and get your money. I did this back in 2001 so I know it can be done. But your amount is large so I am not sure if it still works.

Good Luck.
The offer from her new employer has a high income stream, a guaranteed bonus for next year, etc. They also know that we are selling our house (we have to complete the sale in a year in order to get the relocation to pay the broker fees) and that we own it free and clear. The company is not an Enron type; if it failed, it would be on the nightly news.

I’m not suggesting a return to “liar’s loans” from the dark past.

Maybe I’m just too sensitive to perceived slights. I know it’s part of the process, but I can’t even get them to promise a closing date. Cash closes when it wants to.

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hand
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Re: Rant about relocation mortgage assistance, and a question

Post by hand » Thu Feb 15, 2018 1:39 pm

TomatoTomahto wrote:
Thu Feb 15, 2018 9:55 am

Anyway, we are done with the mortgage company. We are going to pay cash. We have sold enough in our taxable account to leave us $600k short of the total cost of the house. That generated some capital gains, but the next tranche of sales will be more painful. I don't mind resetting the basis, in principle, but since this is money that will probably be inherited (by kids or charity), it seems wasteful. We could take out some loans against two 401ks, but that's limited to $50k (each?).

Is there anything in the new tax law that changes the situation? I'd love to offset some capital gains in equities against a capital loss on our home, but from what I understand, that's not possible unless our old home was an investment property, which it wasn't. Any other ideas?
Why sell stock that is painful due to capital gains, especially if the goal is to sell house and pay off loan? This seems like an ideal situation for portfolio lending where your portfolio is the collateral for the loan.

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Re: Rant about relocation mortgage assistance, and a question

Post by btenny » Thu Feb 15, 2018 1:45 pm

Good Luck. Talk to your mortgage broker about a personal signature loan.

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TomatoTomahto
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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 2:22 pm

hand wrote:
Thu Feb 15, 2018 1:39 pm
Why sell stock that is painful due to capital gains, especially if the goal is to sell house and pay off loan? This seems like an ideal situation for portfolio lending where your portfolio is the collateral for the loan.
That’s not a bad idea. Our mutual funds are all at Vanguard, which I don’t think lends against them. Perhaps I could move them “in kind” to Schwab and borrow against them.

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 2:30 pm

btenny wrote:
Thu Feb 15, 2018 1:45 pm
Good Luck. Talk to your mortgage broker about a personal signature loan.
Thanks, btenny. I’m sure my response to your thoughtful post above sounded like a “yeah, but” knee jerk response, but my wife and I read it and discussed it.

Fwiw, if this particular house fell through, we’d probably drop back 15 and punt; it’s an extraordinary match to our wishes, more so than the literally dozens of houses we’ve looked at in person, and probably hundreds we’ve looked at on Zillow.

trirod
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Re: Rant about relocation mortgage assistance, and a question

Post by trirod » Thu Feb 15, 2018 5:20 pm

I would definitely keep looking at financing options before liquidating more of your portfolio. We acquired a vacation home in the fall and my original intention was to take out a HELOC on my current home to pay for some of the purchase price, so I wouldn't have to get too deep into the lower cost basis investments that I was selling to make this purchase. In the end we found the house we loved quicker than I expected and had to make an offer on it more or less immediately - and all of the banks we talked to needed a month to process a HELOC application (why? I don't know). So we just ended up selling more stocks than I had originally planned to make it an all cash purchase. I have just drafted my tax return, and that capital gain is quite painful to look at now! Especially since in the not too distant future I should be retired and able to take gains at the 0% rate, so it's a real incremental cost and not just a timing difference.

MP173
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Re: Rant about relocation mortgage assistance, and a question

Post by MP173 » Thu Feb 15, 2018 5:50 pm

chickens and vegetables in a $2m house.

Sold!

Go for it.

Ed

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TomatoTomahto
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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 6:16 pm

MP173 wrote:
Thu Feb 15, 2018 5:50 pm
chickens and vegetables in a $2m house.

Sold!

Go for it.

Ed
I KNEW someone would understand! Did I mention the tractor?

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Re: Rant about relocation mortgage assistance, and a question

Post by cherijoh » Thu Feb 15, 2018 6:33 pm

TomatoTomahto wrote:
Thu Feb 15, 2018 9:55 am
We are relocating for my wife's new job, and the new company will cover some amount of relocation expenses. We will be purchasing our new home before selling our old home, so we thought that a mortgage would be helpful to bridge the gap. Round numbers, we're buying a $2M home and selling a home for $1.5M. The basis on the old house is roughly $1.9M.

We quickly found out that a jumbo mortgage, even with a 40% down payment, wouldn't work. The mortgage company told us that "there are no exceptions, but a jumbo mortgage requires 3 paystubs from the new company and then a month for underwriting," so that would mean that the mortgage wouldn't be given until 2-3 months into our new location. Useless 3 paystubs from the old company and a copy of the offer letter from the new company wouldn't do; no exceptions.

So, we applied for a conventional mortgage. A 30 year, with a maximum loan amount of $600k. So, a staggering Loan to Value. It should be a piece of cake. We can't get a solid answer when the loan will be approved. They will still do an appraisal ("you wouldn't want to pay more for the house than it's worth, would you?") They are making us jump through hoops to prove that we will be insuring the new house (really? I am stupid, but not insane). They want proof, twice, once now and then once 10 days before closing, that the employment offer still stands from the new employer (really? you have a copy of the offer; do you think we're uprooting our household for an offer that isn't solid?)

Anyway, we are done with the mortgage company. We are going to pay cash. We have sold enough in our taxable account to leave us $600k short of the total cost of the house. That generated some capital gains, but the next tranche of sales will be more painful. I don't mind resetting the basis, in principle, but since this is money that will probably be inherited (by kids or charity), it seems wasteful. We could take out some loans against two 401ks, but that's limited to $50k (each?).

Is there anything in the new tax law that changes the situation? I'd love to offset some capital gains in equities against a capital loss on our home, but from what I understand, that's not possible unless our old home was an investment property, which it wasn't. Any other ideas?
Why are you in such an all fired hurry to by a house before she starts the new job? What if it turns out to be a disaster and she hates it? Usually you have a window to use relocation benefits for a new job.

I have one former colleague who was on a house-hunting trip for the new job she had accepted when they called to tell her the company was doing a reorg and they were reneging on her job offer. She was supposed to start about a week later. She had been doing contract work, so she didn't resign from a F/T position to take the new non-existent job. She was planning to get an apartment not a house, but had they waited a few more days to cancel the job she would have been locked into a lease in a city where she didn't have a job. :annoyed

Another friend was selling her house and the night before the closing, she got a call that the buyer had lost his job and therefore was bailing on the home purchase. There is definitely a reason that lenders want to reconfirm employment before finalizing the mortgage. I'm actually surprised they only require 3 paychecks on the new job.

theluckyone
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Re: Rant about relocation mortgage assistance, and a question

Post by theluckyone » Thu Feb 15, 2018 7:30 pm

Blame the difficulty to obtain financing on Dodd-Frank and the Ability to Repay and Qualified Mortgage Standards that were implemented.

https://files.consumerfinance.gov/f/201 ... -repay.pdf

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TomatoTomahto
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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 7:41 pm

theluckyone wrote:
Thu Feb 15, 2018 7:30 pm
Blame the difficulty to obtain financing on Dodd-Frank and the Ability to Repay and Qualified Mortgage Standards that were implemented.

https://files.consumerfinance.gov/f/201 ... -repay.pdf
The last time we wanted a mortgage was 23 years ago. Things are very different now. Some of that is change for the better, but some of it borders on silly. If someone decides that the hoops are sufficiently onerous that they would rather pay cash, that might serve as a sign the they had “the Ability to Repay.”

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Watty
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Re: Rant about relocation mortgage assistance, and a question

Post by Watty » Thu Feb 15, 2018 7:45 pm

btenny wrote:
Thu Feb 15, 2018 1:45 pm
Good Luck. Talk to your mortgage broker about a personal signature loan.
I didn't follow all the details but a margin loan for a few months might also fit somewhere into the puzzle.

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rob
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Re: Rant about relocation mortgage assistance, and a question

Post by rob » Thu Feb 15, 2018 7:59 pm

I didn't see this mentioned and it's stupid but what about cash out refinancing the old place (based on OLD pay stubs :-) ) and use it to buy part of new then dump..... It might cost less than the cap gains??
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

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TomatoTomahto
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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 8:09 pm

rob wrote:
Thu Feb 15, 2018 7:59 pm
I didn't see this mentioned and it's stupid but what about cash out refinancing the old place (based on OLD pay stubs :-) ) and use it to buy part of new then dump..... It might cost less than the cap gains??
Rob, I considered that, but we don’t have a current approval for a loan on the old house. It was probably a costly oversight not to have planned for it. I (mistakenly) thought we’d be a slam dunk for a quick and easy mortgage, which speaks to the value of knowing how the mortgage business works now, rather than the last time you wanted one.

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Re: Rant about relocation mortgage assistance, and a question

Post by AlohaJoe » Thu Feb 15, 2018 8:35 pm

TomatoTomahto wrote:
Thu Feb 15, 2018 2:22 pm
hand wrote:
Thu Feb 15, 2018 1:39 pm
Why sell stock that is painful due to capital gains, especially if the goal is to sell house and pay off loan? This seems like an ideal situation for portfolio lending where your portfolio is the collateral for the loan.
That’s not a bad idea. Our mutual funds are all at Vanguard, which I don’t think lends against them. Perhaps I could move them “in kind” to Schwab and borrow against them.
Vanguard actually will lend against them but it is borderline usurious :happy . (Something like Fed Funds Rate + 7.5%!)

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Thu Feb 15, 2018 9:14 pm

AlohaJoe wrote:
Thu Feb 15, 2018 8:35 pm
TomatoTomahto wrote:
Thu Feb 15, 2018 2:22 pm
hand wrote:
Thu Feb 15, 2018 1:39 pm
Why sell stock that is painful due to capital gains, especially if the goal is to sell house and pay off loan? This seems like an ideal situation for portfolio lending where your portfolio is the collateral for the loan.
That’s not a bad idea. Our mutual funds are all at Vanguard, which I don’t think lends against them. Perhaps I could move them “in kind” to Schwab and borrow against them.
Vanguard actually will lend against them but it is borderline usurious :happy . (Something like Fed Funds Rate + 7.5%!)
We only need an additional $600k, effective rate 6%, so not too bad if we don’t keep it too long. I will call tomorrow.

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Re: Rant about relocation mortgage assistance, and a question

Post by itstoomuch » Thu Feb 15, 2018 9:28 pm

TomatoTomatoe.
BTDT, 3x.
Hopefully we will close next week on a place with 50% Down. Seattle. A 1031. Lenders think we are going to walk away from a 50% down?
Try buying a house when you and spouse are in retirement. They insist that a convention loan is the best deal. Conforming will count future/expected rents on the unit but won't could IRAs or IRA GLWB annuities.
But I have never seen any numbers for a non-conforming, asset based loan.
Apparently no one read my posts on our experiences. :annoyed
YMMV
GL
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Re: Rant about relocation mortgage assistance, and a question

Post by itstoomuch » Thu Feb 15, 2018 9:38 pm

Anyway, we are done with the mortgage company. We are going to pay cash. We have sold enough in our taxable account to leave us $600k short of the total cost of the house. That generated some capital gains, but the next tranche of sales will be more painful. I don't mind resetting the basis, in principle, but since this is money that will probably be inherited (by kids or charity), it seems wasteful. We could take out some loans against two 401ks, but that's limited to $50k (each?).
Our first rental, we tried for a loan from BigBank. We had money at BigBank from an inheritance. Too many hoops to jump thru. We found a perfect place in Seattle (20 minutes to AMZN by foot, flat land) and bought in cash from BigBank. Worked out because we got to close fast and rent fast. BigBank was paying 0.01% interest. We get 5-7% ROI from rent. It was a good trade for us.
YMMV
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

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Re: Rant about relocation mortgage assistance, and a question

Post by ram » Thu Feb 15, 2018 11:45 pm

I have noted that in my small town, working with a small local bank, the rules can be somewhat flexible. A bank employee came to my house to appraise. That was 9 years ago. From what I hear things have not changed. But the median cost in my town is 100K and hardly anything exceeds 1M.
Ram

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Re: Rant about relocation mortgage assistance, and a question

Post by JGoneRiding » Fri Feb 16, 2018 12:04 am

I agree with "hand" get a margin loan. Perfect situation for one and the rates are suppose to be very reasonable.

I actually find the 3 paycheck thing odd. I have only ever needed 1 months worth (for what it is worth I have done 3 loans on the last 3.5yrs) and even when My husband was relocating and we were buying at same time we only needed work statement and old and one new stub. Granted I was in same position for 8 years

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Re: Rant about relocation mortgage assistance, and a question

Post by buckstar » Fri Feb 16, 2018 9:34 am

I was in a very similar situation last year, starting a new job, had not sold my previous house and was under contract for a new house ($1.5M). We worked with an independent mortgage broker who found us a Jumbo 5/1 ARM ($1.2M) that we kept for a total of 5 months. We sold the old house and refinanced soon after. I would avoid the big banks and instead find an independent mortgage broker. Some, including mine, even have their own investors. They were willing to accept a signed contract for my new position.

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Re: Rant about relocation mortgage assistance, and a question

Post by itstoomuch » Fri Feb 16, 2018 11:58 am

Underwriter for mortgage (conforming) wanted to know why and outcome of a "disputed credit card".
I had to give them a signed explanation that, I forgot why. The Card was apparently Opened in 2006 and Closed in 2008. There were no outstanding credit balances in the ~24 months. Credit report only reports the issuing Bank and not the affiliation of the Card.

Underwriter wanted to know why there were a number of credit inquires in the last couple of months. If they would look at the report, they would discover that it was from another mortgage company. We had to give them a signed report that we were looking for a pre-approval with another mortgage company in anticipation of a property sale (agreed sale pending conditions) and 1031. We didn't use this company (rate too high) and chose the inquiring company.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Fri Feb 16, 2018 12:39 pm

@itstoomuch, your username describes my feelings about the mortgage underwriting perfectly. Ditto the hoops we'd have to jump through in order to get an "investment backed loan."

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Re: Rant about relocation mortgage assistance, and a question

Post by curmudgeon » Fri Feb 16, 2018 1:51 pm

Mortgage loan paperwork has gotten really painful in the Dodd-Frank age. We did a couple of loans and refi's over the past 10 years, and it really got on my nerves; stuff like having to explain every significant deposit into our bank accounts for the past few months.

If you can do it with a margin loan, that sounds ideal but pay attention to the limits. Alternately I'd look at a HELOC on the old house; should be somewhat faster than a mortgage. Expensive and "unique" houses often are slow-moving on the market, so you probably have some room; if you have to go back to the seller for some (moderate) amount of additional time to make things close, it may not be a problem (especially if the house was on the market for a while before your offer).

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Re: Rant about relocation mortgage assistance, and a question

Post by mmmodem » Fri Feb 16, 2018 5:22 pm

TomatoTomahto wrote:
Thu Feb 15, 2018 11:35 am
I think it's unreasonable since we showed the mortgage company that we had sufficient funds to cover the purchase even if my wife were not employed by the new employer. I understand that there's a process, but at some point, sanity should trump process.
We just relocated as well and we're experiencing the same problem. It aggravates me that I can't get a loan for the next home when we have assets that exceed the cost of the home many times over. In fact, equity alone from our current home will pay for the next home outright. The relocation company was of no help. I actually think they are a hindrance as the buyer value option restricts me to the mortgage company of their choosing. Deviation while allowed, is not recommended.

Thus, we found a temporary rental and will have to wait for our home to be sold before we can enter contract for the next home. Good luck to you and good luck to us as well.

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Re: Rant about relocation mortgage assistance, and a question

Post by WildBill » Fri Feb 16, 2018 6:12 pm

TomatoTomahto wrote:
Thu Feb 15, 2018 11:35 am
I understand that there's a process, but at some point, sanity should trump process.
Howdy

:twisted:

No comment would be as eloquent as your own words.

Good luck with the move

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

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Matahari
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Re: Rant about relocation mortgage assistance, and a question

Post by Matahari » Fri Feb 16, 2018 6:35 pm

I read your thread with interest; thank you for posting it.

When it's time to retire and downsize, it's likely we'd want to buy something first before putting our house on the market. We'd also want to buy the next property outright, without a mortgage. Reading about your experience, I plan to stockpile cash ahead of time in order to avoid having to liquidate some of our portfolio or go through the hassle of obtaining a bridge loan.

Do you have an idea of how long it would take to sell your current property?

Good luck with your closing and your move!

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Re: Rant about relocation mortgage assistance, and a question

Post by Golf maniac » Fri Feb 16, 2018 6:44 pm

Can’t blame the banks for the crazy rules that now override common sense. Back in 2008 to 2012 all the investors and insurers of mortgages looked for any tiny defect in the bad mortgages to stick the loans back on the balance sheets of the banks. So the banks learned, you have to follow exactly the underwriting rules for every loan so they do not come back when sold.

For the OP, I agree, talk to smaller banks in the area you are buying. Many will portfolio loans and will be much more accommodating.

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Fri Feb 16, 2018 7:31 pm

Matahari wrote:
Fri Feb 16, 2018 6:35 pm
When it's time to retire and downsize, it's likely we'd want to buy something first before putting our house on the market. We'd also want to buy the next property outright, without a mortgage. Reading about your experience, I plan to stockpile cash ahead of time in order to avoid having to liquidate some of our portfolio or go through the hassle of obtaining a bridge loan.

Do you have an idea of how long it would take to sell your current property?

Good luck with your closing and your move!
Thanks for your well wishes.

I think that, financials aside, it is easier to purchase a new house before you sell your old one. An empty house is markedly easier to paint and repair; in our case, our house was relatively well maintained, but it’s almost 100 years old, has been home to pets and kids, and we painted colors that we like rather than colors (light grey and white) that realtors like.

I’m not sure that you have to stockpile cash, but it helps to have accounts ready 3 months ahead of time. I talked to a Private Client banker today, and we might have gotten a brokerage account opened, mutual funds moved from Vanguard, a loan originated at 3.49%, and a Bank Check issued to the sellers in 3 weeks; doing it in 2 weeks was a real stretch. (We have employment related reasons not to convert our Vanguard account to brokerage.)

To be honest, I’m surprised that the realtors are suggesting that we can sell in 30-60 days. Driving around town, I see most older homes (ours is nearly 100 years old) sell, get torn down, and McMansions erected (think of a house that Tony Soprano would be impressed by). The house next door to us was purchased for $2M, torn down, the developer says he put $2M into the new house, and it listed for nearly $5M. That’s okay by me, but tell me before I paint and repair :oops:

I would like to believe the realtor. Our house (as most) looks its worst in winter. Families (presumably the buyers if not a developer) want to close and get settled in before the next school year (our schools are highly ranked). Our town is also very driven by Wall Street bonuses, most of which were recently awarded. So, I want to believe, but let’s see.

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Re: Rant about relocation mortgage assistance, and a question

Post by itstoomuch » Fri Feb 16, 2018 8:27 pm

Side bar:
we are one week to closing. New Build.
We are apparently good on our side of the transaction and vetted.
Mortgage Company just can't seem to get the verification of title on our target TH (3 TH built on 1 lot). Mortgage company discovered today that the lot has not been subdivided for the 3 completed units. ???? I wonder how the builds were even permitted??? How did the builder get a construction loan??? Owner of lot has filed for subdivision papers earlier this week. :annoyed
If we miss the closing date, Only $2000 to extend the mortgage closing date for 14 days(?) Maybe 1/8-1/4 point for a month(?)

I started a case file with our Legal Shield people.

Don't you love RE surprises :( :confused :annoyed
YMMV
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Re: Rant about relocation mortgage assistance, and a question

Post by mouses » Fri Feb 16, 2018 9:11 pm

btenny wrote:
Thu Feb 15, 2018 12:19 pm
Re the mortgage. The mortgage companies are just crazy funny about requiring steady monthly income STREAMS. They just do not care if you have the cash in the bank.
This was my experience also some years ago when I retired. I could have owned both houses at once, but only by taking money out of IRAs. I probably talked to 5-6 places, I don't remember. Finally my sister-in-law pulled some strings at the MegaFinancial place she worked, otherwise I would have been out of luck.

Tomato, would the owners of the new house let you rent it for a year?

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Fri Feb 16, 2018 9:18 pm

mouses wrote:
Fri Feb 16, 2018 9:11 pm
Tomato, would the owners of the new house let you rent it for a year?
I doubt it, especially as they were anxious for us to remove the mortgage contingency from our offer. They have already moved into a new residence.

In any case, we are doing an all cash closing in a couple of weeks.

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Re: Rant about relocation mortgage assistance, and a question

Post by mouses » Fri Feb 16, 2018 9:25 pm

p.s. Any house where you can have chickens is a good house :-) Be sure you have them well protected against predators. If you don't know already, read up on how vulnerable they can be to determined wildlife.

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Re: Rant about relocation mortgage assistance, and a question

Post by TomatoTomahto » Fri Feb 16, 2018 9:39 pm

mouses wrote:
Fri Feb 16, 2018 9:25 pm
p.s. Any house where you can have chickens is a good house :-) Be sure you have them well protected against predators. If you don't know already, read up on how vulnerable they can be to determined wildlife.
My SIL has chickens in CT. We will have a very secure chicken coop, with lots of local advice on making it predator resistant. Chickens will be phase 2 of my learning to feed the family, phase 1 being vegetables.

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