Is getting a mortgage this hard for everyone?

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My wife and I have finally found the house we want to buy. When we approached our mortgage broker 2.5 weeks ago, we were told this would be very easy and we could close in 10 – 14 days. After 2 weeks of constantly providing “1 more” piece of information for the underwriters (which we did quickly and accurately), we were finally told that they would not approve a “full doc” loan?
Here are the basics:
– We have over 80% of the cost of the house in an account designed to pay for the house (20% down, plus a chunk to draw interest and make monthly payments)
– We have “spotless” credit
– My annual salary for the last 3 years rank me in the top 1% of the US
– I have stocks worth 3 times the cost of the house
– It is a jumbo loan

I was told it was taken to the highest level of the corporation and they said “NO” and if I have that much money I should pay cash for the house.

What is a “full doc” loan? What are my options? Does this seem odd?

  1. Reply
    February 8, 2011 at 12:11 am

    It could be you are going through a flaky mortgage broker and not a direct lender. You may want to check with a Countrywide, Wells Fargo or Washington Mutual.

    A full doc loan means that you are being completely processed to get the best rate and terms. Some people who are less qualified take other kinds of loans, don’t have to provide all that stuff but get less attractive rates and terms.

    The other thing is the entire mortgage industry is in a state of disarray right now as a result of the subprime fiasco and all lenders and being pickier than ever. That’s not your fault.

  2. Reply
    C D
    February 8, 2011 at 1:00 am

    Full doc means you give the investor all of your banking, income info.

    The banks have so many foreclosures on their hands right now, that they don’t have the funds to back the loans anymore. They need to be very careful with whom they lend to. Sounds like your credit is the issue(I know you said spotless) That doesn’t mean a good score. You may need to put a bigger chunk down for a year, till your credit score raises.

    If you have that much money, why would you pay all the interest to the bank? I’m sure you’re not making that money sitting in an account. I’m a Licensed Mortgage Broker, I think it sounds crazy too…Doesn’t make any sense! Sorry! The investor is looking at it as you may close on the house and not pay the note, live there for a year and have the house foreclosed on. So many million dollar homes are being foreclosed on and the banks are losing too much money!

  3. Reply
    February 8, 2011 at 1:55 am

    I am not sure what full doc loan means, but if I were you, I would try another bank/lender. I bought a house almost 2 years ago, and we closed about two and a half weeks after my offer was accepted. I only put down 5% (I was a recent college graduate, and just did not have the cash to do more). I would think you should be able to get a loan, just look elsewhere.

  4. Reply
    February 8, 2011 at 2:02 am

    Are you self-employed?

    Have you spoken to your bank instead of a mortgage broker? A full doc loan is just that – one that requires full, verifiable documentation – including verifiable earned income (that has come from a consistent source for 2 consecutive years – same employer), passive income won’t count. If self employed you must have been in the same business for two years, verified.

    They generally get a bit better interest rate because there’s less risk involved in issuing them, but by the same token – if there are any “flags” in the process, they can be denied as well. Jumbo loans are large loans – there are fewer of them and so they carry a bit higher interest rate. A full doc on a jumbo loan is the equivalent of trying to “hedge the interest rate” (in essence).

    Stated income loans don’t require verifiable earned income – if you’re self employed or rely on passive income, this would be another option (if you just have to have a mortgage).

    I’m all for paying cash if you have it unless you’re buying the mortgage for tax purposes.

  5. Reply
    February 8, 2011 at 2:05 am

    I don’t know what a full doc loan is, but we’re in a similar situation (maybe not quite as well off) and did fine. They thought it was going to take longer at first, but it looks like we’re going to close in 14 days as we hoped. I did notice that the mortgage company seemed a little more paranoid than last time I got a home loan though, and asked for a lot more pieces of paper. I was half expecting them to ask for notarized copies of 6 months of grocery receipts or something next. Maybe it’s the collapse of the sub-prime mortgage market making everyone jumpy.

    Did they actually tell you your credit score? I was surprised that mine isn’t perfect or almost perfect since I’ve never had problems paying my bills, but it turns out that certain things bring it down that I wouldn’t have guessed. I have too few accounts. My husband has too many accounts. (You’d think between us we’d have just the right number, but I guess it doesn’t work that way.) My credit history is too short because I just moved to this country a couple years ago. He opened a new account too recently. That sort of thing. I guess it was good enough to pass muster though.

  6. Reply
    Antonio Z
    February 8, 2011 at 2:25 am

    At 1st glance If I was working for you I would probably try and go with a fast and easy type program. This is basically a stated program for people with excellent credit. The rates are still very close to those full doc programs plus you don’t have all the hassle of proving to the lender that you make the money you say you do. The major lenders still in business offers these type of programs. Country Wide, Citi, Wells Fargo, Indy Mac, etc….. To be honest I think Indy Mac right now is the best when it comes to Jumbo loans. Keep looking I’m sure you will be able to get a loan. As far as paying cash for the home I don’t know why people think owning a home free and clear is the best way to go. Equity is basically dead money. the only way to pull it out is to pay someone to get the cash for you. Not only that but homes in most areas will not give you the same return on investment as other investment options. I would if I was you get a 100% loan with the PMI (Private Mortgage Insurance) tied in to the rate. Take the 20% you were going to put down and put it into whatever account or investment plan you already have established. In the long run this way probably will make you more money.

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