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?
I like the plan to pay off your house and do a vacation, but I would think the ultimate vacation would be a month in Europe or something.
Hopefully the underwriter will just sign off on the mortgage and you’ll be good.
I love the positive spin you’ve put on this. Your back up plan sounds great! I REALLY hope you get the house, I know how much you really want it.
Oooh, I feel your pain. When I had my house built (2008) I had two main sources of income – my corporate job and a second job teaching one class a week at a local University (I still have both these jobs, by the way). The lender required me to verify my 2nd job income a second time just a week before closing in order to “okay the loan.” Did I mention that the 2nd job income was only about 2% of my total income? Oh, and that my credit score was over 800 and I put over 30% down on the house and I had other assets that could have easily been sold to pay in full for the house should my income sources have completely vanished? And that the house value was way below what the bank said I could afford, and… and… and… In other words, I was not a default risk AT ALL, yet I was hassled. Moral of the story – BANKS ARE STUPID!
What really got me is the lender said they needed the information to approve my loan, but I had already been approved! I was scared because I had just built a house and suddenly there was a threat of no financing?!?! But in the end all was fine, though it wasn’t without a couple sleepless nights. Hopefully it will be fine with you, too.
Wow that would suck if it doesn’t go through. Have you tried talking to any smaller local banks or credit unions? They may be able to help you!
Good luck and I hope everything works out. Try giving Mr. Yoakum a call and see if he can help you out. If worse comes to worse, can you pay off your current home and still put down 20%? I think that will definitely cement your loan for the new home. Just in case it doesn’t work out, you should check your contract to make sure your earnest money is refundable.
Totally understand the crazy underwriting department. Wen we were refinancing our mortgage at the last minute they wanted all the tax bills and proof of insurance on our other property – not the one being refinanced! The most ridiculous
Wow,all that work! Good luck!
I think either plan sounds wonderful. And I’ve been dreaming of a big, fun vacation like that for awhile!
@The Retired Landlord, ah, yes. Maybe a cruise to Europe. Honestly though, snorkeling at Caribbean ports just sounds heavenly.
@W, hopefully.
@Call Me, yeah, that is obviously what we are hoping for too, hahaha. But it is nice to know we won’t just die if we can’t get the house…
@Denise, banks are stupid. But it’s their money, so I will jump through their hoops. The backup option is just so I no longer worry as I send off the next bit of info requested…
@Lance, nope, real banks and credit unions staunchly require two years of self employed tax returns. Mortgage brokers are the only ones with the power to change that to one year if all other requirements are met. At least, that is the impression I got by calling around 5 different banks and credit unions in my area. But I do have a backup mortgage broker now.
@LeeHom, I will totally give him a call – thanks for emailing his details. We can technically pay off our current house and still have enough for our closing costs, BUT we would have to use all of our cash on hand. Like, we’d have about $500 left in ING so our stocks would be our emergency fund. I rather not do that. I like having the $25,000 cash padding. But we will be paying off our current home next year.
Our earnest money is no longer refundable – it was all the way up to pouring the slab, but now it has been locked up. But a $2750 loss is really the least of our problems if this doesn’t work out.
@Mrs Pop, stories like that is what produced our backup plan, lol.
@Ornella, thanks!
@Michelle, yeah and I need one now, so it is win-win, hahaha.
Crystal, that really sucks. I’m glad you found some prospective. Owning my business has always caused delays with lenders. They ask for the same info a million times and it gets so frustrating. I think it will all work out though. Sending good thoughts!
I love your back-up plan. When I bought my house last summer/fall (it took 5 months to close, a foreclosure) it was a nightmare dealing with the underwriter. Even though I had been employed by the same company for eight years, I had a leave of absence within the last two years (it was maternity leave!!!) and the underwriter absolutely could not get past that. They even made me provide letters from doctors to back it up. I know they’ve had to tighten things up with home loans, but it seemed a bit ridiculous to me. In the end it worked out, but I was on the verge of a breakdown lol. Perfect credit, income, savings, job history and it just didn’t seem to matter. I hope your underwriter is a lot more understanding and that you get your dream house!
Heck yes, cash for a house! I’ve always wanted to see someone do this. Though, I am rooting for this house to close, obviously
Didn’t the builders need something in writing before they broke ground?
With most builders, if your loan does not get approved, they will refund you your earnest money.
You usually lose your earnest money if you fail to close in time or refuse to purchase the home and walk.
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