Buying a House - Not for the Faint of Heart

Buying a House – Not for the faint of heart

The exciting moment comes when you know you’re ready to purchase a home. It’s either your first time, or you think you’re experienced and breezed through a purchase during the housing boom of the mid-2000’s. Well, sit down, buckle up, and get ready for the ride of your life. It’s a whole different scenario than it was just six to ten years ago.

Make sure your patience meter has been filled to overflowing. You’re going to need every ounce you can hold. Also make sure that you stop spending money NOW. Don’t open any new credit cards, no major purchases, and for heaven’s sake, don’t buy a car. While it is imperative that you hire a Realtor who knows what they're doing in this ever-changing market, it is equally important that you get pre-approved before you start to look at houses with the paragon that you select.

Your experienced Mortgage Lender will give you a list of items that will be needed to provide for the bank to know that you are a worthy borrower. Standard items you are sure to need include: two years of tax returns, current pay stubs, a good credit history, proof that you’ve been in the same line of work for the past two years (unless you were a student previously), bank statements, an IRS Form 4506-T proving that the tax return you provided is the one you actually gave to the IRS, a paper trail of deposits into your account, a copy of the front and back of your earnest money check, to name but a few.

But in the backlash of the mortgage loan fraud collapse in 2006-2010, underwriters are getting more absurd in their often last-minute requests for you to be able to borrow their money. As long as you remember the old adage He who has the gold makes the rules, you should do just fine. Here are a few of the final-hour requests that we have seen in the past few months:

• A divorce decree from 25 years ago
• Proof of bankruptcy discharged 30 years ago
• Bank statements from a company that was dissolved 25 years ago
• An affidavit from the SELLER that they are not the known criminal whose name they share (as well as a copy of their driver’s license BEFORE loan approval issued)
• Proof from H & R Block that your rapid refund isn’t a loan but a legitimate refund of taxes due
• Tax return proof that your small business is actually Avon (or Amway, or whatever)
• Proof that the daily cash deposits from my waitress client were from her job and were not drug money (HUH??? How are we supposed to PROVE that?)

Moral of the story, put on your Boy Scout hat and BE PREPARED. This game is not for the faint of heart.

Have you seen any unusual requests in your recent dealings with underwriters and lenders?