As I talked about a couple of weeks ago, we were about 4 weeks away from hopefully closing on our new home. Well, the tentative closing date has been changed from September 10 to September 20-28th, so we are still 3-4 weeks away. It didn’t help that they ordered the wrong brick, so that delayed everything 5 days. Or that storms have started…oh well. I am still happy that we’re close.
Finding Our Mortgage Broker
As you probably know, Mr. BFS and I are both self employed. That usually kicks butt…but banks hate us. Our unstable income, even though it is at least 25% more than we used to make even in our worst month and 100%-400% more in our great months, scares the crap out of number crunchers. I understand – it sometimes worries me too.
Anyway, this means that two different branches of Chase and the first mortgage broker I spoke to all turned us down flat for loans. I called one last mortgage broker before I was going to call it quits on the search and we would never have gone house hunting…
That last mortgage broker did not think she could help us either since I had been self employed for less than 2 years, but she said she could at least try. So she asked us a bunch of questions and consulted with her underwriter. Our credit was beyond excellent no matter what agency they looked at, we were putting 20% down, we had significant assets on hand, we already almost owned one home, and I had owned BFS for at least 2 years. So the underwriter gave us the thumbs up.
After submitting a butt-load of proof of our finances, we ended up being preapproved for $300,000 at 4.375% in April 2012.
Mortgage Broker Paperwork
We thought the worst was over since we pretty much gave them a picture of every single account we have. But now that we are a month out, the mortgage broker needs even more. Specifically, they need updated numbers for every account (expected), a fresh credit report (expected), and a copy of our DBA license or a letter from our CPA explaining that our business is in good standing.
Ummm…we don’t have a DBA license since we file as a Schedule C and Mr. BFS is our in-house tax person. So, they will settle for a letter from me explaining the business and our history along with our Paypal and bank records for the last 7.5 months. Keep is mind that we usually receive large (huge) payments for a company and pay out multiple cuts for the multiple bloggers in deals. Oh, that won’t be confusing at all.
Some good news is that rates have dropped even more since April, so we may be able to get our mortgage at 4% or 4.125% instead of 4.375%. Yay!
Our Backup Option
After jumping through this last set of hoops the best I can, we will cross our fingers that closing goes through without any further complications. If the underwriter balks at something or decides we aren’t worth the risk at the very last minute, we pretty much don’t have many alternatives. I’ll try to get a loan through some other brokers or online companies, but I wouldn’t have high hopes. So we’ve created a backup option.
If we cannot buy our dream house, we will be taking the ultimate vacation and paying off our current home. By ultimate vacation, I mean we will be trying to convince as many of our friends as possible to get together for a cruise, Vegas vacation, or something along those lines and spend a week drinking away our current dreams of granite countertops, a library, and showers big enough for 4 people.
We will also be cutting our payoff check for the current mortgage immediately instead of waiting until next year. Then, we would start saving once again…hard. Hard enough that we can buy back our dream home in cash from whatever owners it has in 5 years or less. Yep, our backup option pretty much kicks a$$.
So from now on, I am approaching this will less worry lines on my face. If we get our home, which we have a 99.9% chance of, WHOO-HOO!!! If not, yay too!!! So boogers on all of the stress…I am tossing that to the side for the next month.
Do you do make backup options to help life speed bumps suck less? What would you do if something you worked on for 4 months just fell through the floor?