[quote=sdrealtor]CAR
Let’s just say the days of EZ credit are long gone. You have not gone through the mortgage process in many years and do not have any idea how difficult it is for the self employed among others. I have been working on a refi for a few years and it has been excruciatingly difficult because I am self employed. My refi literally funded on Thursday.
Let me throw out some numbers to give you an idea of how tough it really is. The Loan to Value was under 40%. I have ZERO debt other than mortgage debt, not one penny. My FICO scores are 862. My mortgage payment was under 20% of my gross income. I have more than a years reserves in cash. The refi dropped the payment I had no problem making for 9 years by more than $500/month. If I rented my home it would be cash flow positive by well over $1,000/month. As far as I could tell, this was about as risk free a loan as could exist.
I had to provide 2 years tax returns and bank statements for the last 24 months. Every single deposit over $5,000 into my account the last 2 years had to be documented with cancelled checks. The requests for documentation of anything and everything were non-stop. I provided everything they ever asked for within 24 hours and in most cases had it to them electronically within minutes of their requests. It’s finally over.
San Diego is a small business economy. There are very few large employers here and I would venture to guess that the number of self-employed/small business owners here is well above the norm for large metro areas in the US.
What do you think would happen if there was even a hint of sanity in the lending market for non W-2 income earners?[/quote]
sdr,
Even as a W-2 earner, I had to provide all these same documents when I borrowed back in 1997/1998. I think those requirements ARE sane, and would have the same requirements if I were to lend large amounts of money to people I don’t know.
I agree that lending is much tighter now than it has been for most of this past decade, but we still have too many loans with too little down (3.5% FHA loans that are underwater the moment they’re made), and even 10% down loans. The FHA loans are guaranteed to fail in large numbers if those sellers have to/want to sell in the future. I don’t mind govt subsidies where the number of loans is very limited to the extent that they don’t affect asset prices; but today, these loans make up a large portion of mortgages, and that is a big problem, IMHO.
All that being said, a big congratulations to you for getting such a nice reduction on your mortgage payment. That way, you’ll easily be able to afford our steak dinner at the end of next year. 😉
