The misadventures of mortgaging

posted by Jeff | Friday, February 21, 2014, 11:10 PM | comments: 0

We closed on the new house today, and that is a relief. I haven't yet turned the corner toward excitement over it, but I'll get there. Right now, I'm just mentally exhausted from the financing process. I'll talk about the ordering process another day. I need to put all of this nonsense behind me.

Let me jump back a few years first. If you knew me circa 2011, or read this blog, then you know that part of the reason we moved back to Cleveland from Seattle was that I couldn't sell my house. That was likely a mistake, but regardless, I was a little bitter and angry. The housing crash happened in part because lenders and buyers assumed too much risk and were stupid (I also blame the feds in their deregulation craze that made the risky stuff possible). In the end, I sold that house last year after 12 years, at a loss. Why was I bitter? Because I did everything right, in that I bought only a house I could afford, I was always on time with payments, and I did everything right. The pile of suck was rooted in the fact that everyone else did stupid things, and that hosed the market and me.

This year, we decided after being in Orange County just a few weeks that we would build a house here. It's quite a reversal in my thinking, but rates were low, prices were low, and both were going up. It felt relatively low risk, and frankly we've been dying to have a place that was purely a Puzzoni endeavor. I didn't want to dump everything we had into a house, especially investments, but with cheap credit, it felt right.

Again, I feel like I've been doing everything right. I had a credit score of 800, no debt other than a car payment (which I suppose I could have paid off), no credit card debt, haven't missed or been late paying anything ever, significant savings, and I've been banking bigger money than average because I've been contracting. Some would even characterize this as starting your own small business. In common sense terms, I'm about the best person ever to lend money to.

The builder's default lender, as well as a local credit union, outright rejected me. In their mind, since I was working contract, and not W-2 as I did last year, I was literally not making any money. That's how the underwriting robots looked at it. At that point, I was ready to just give up, and sit on a pile of cash and/or investments until things made sense again. Then, at the last minute, the builder found a lender who could roll with the issue. Since the house would take six months or so to build anyway, he said it would all be good once we filed taxes showing I actually made money.

That's exactly what we did, though prior to that I had to send some of the most ridiculous and absurd things to keep in the game. It wasn't just months and months of bank statements, but some really absurd things. I had to peck out a letter (one sentence) indicating that I lived at two Seattle addresses because I was working for Microsoft. I had to get my accountant to write a letter indicating that the move to Florida wouldn't impact the business' ability to make money. Can't wait to see what she bills me this year. It was one ridiculously stupid thing after another.

Then, this week, days before closing, they were like, "Yeah, you need to pay your tax due. You can't wait until April 15." Shit. My tax due was significant, because I didn't pay a quarterly estimate for the second quarter, and even then I was mostly guessing because working contract wasn't really what I had planned for 2013. I would have the money, but I needed the two intervening pay periods.

But no, that wasn't good enough. In the end, I took out some money from my Roth IRA, just the contribution part, in the hopes that it was small enough to not incur the penalty. That's the opposite of what I wanted to do, but coming down to the wire, I really didn't have much choice. On the plus side, I don't have to pay the taxes in April, but it still sucks.

It was one hoop after another, to the extent that I was almost ready to just completely walk away. I was tired of the stress, and frankly the ridiculous and constant interrogation into every little thing I did financially. The process sucked the joy out of something that should have been exciting.

Whatever, it's over now, we have keys. Once the lease break terms are settled, we'll actually be spending about $400 less per month on a place to live, for a lot more space. The house was already appraised for $3k more than we bought it for, so at least the short term potential for appreciation is good. Tomorrow I can start feeling good about the purchase.

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