Monday, June 19, 2017

Q: I don’t like the mortgage lender you recommended.

She’s telling me I don’t qualify to buy the house we saw that I was going to make an offer on.  I know I make enough money to make the payments so what’s the big deal?  I checked with my buddy’s loan guy and he said the same thing.  They’re saying I don’t have “documented” income high enough to qualify for the loan.  What kind of &%#* is that?

A:  Sadly, you have fallen into one of the two biggest traps there are when you are paid “under the table” or “off the books.”  Undocumented income, which is money you hide to avoid paying taxes, can’t be included when figuring your income for a home loan.

The other time when this comes back to bite you is when you apply for Social Security benefits.  Those benefits are based on your documented income, with W-2 or 1099 forms that show the money on which you paid taxes.  I have talked to many people who believe that they are cheating the IRS but now that they are older, see that they were really cheating themselves.  They are collecting only a fraction of the amount in social security that they could be receiving if they had not lied about their income.

There may be some folks we call “hard money lenders” who can find a way to give you a loan based on bank deposits and such, but you will pay a far higher interest rate, be required to have a larger down payment, and will have to have an excellent credit score.
We always hear a lot about caring for our “inner child” in self-help books and psychological articles.  But at some point, it’s important to take care of your inner elder.  The person you are when you are older is counting on the person you are now, when you’re a wage earner, to put as much as possible into retirement accounts, savings and social security.  Otherwise you may be setting yourself up for a sad and possibly very poor old age.

My husband and I are probably going to look for another real estate person to work with.

You keep sending us listings that are not even close to what we’re looking for. Nothing personal, but you must not have understood what we want.

A:  I’m sorry you feel that way but what any other Realtor will tell you is that you have basically missed the boat here in terms of price.  You are hoping to find something that, in our current market, will sell for twice what you are qualified to pay.  I have been sending listings in your price range hoping that you will readjust your thinking and understand that you will not be able to get what you want in our market.

Prices have gone up substantially since you began searching for a home on Vashon Island.  Although I tried to make clear that you would have to be in a far higher price range to get what you said was essential to buying, you have failed to get realistic about what you can afford.  I wish I could refer you to another area in the region where you might find your dream home, but prices are going up all over the greater Puget Sound area and, although prices are still lower in many parts of Puget Sound, the type of property you want will not be affordable to you in any of those places.

It’s always hard for people to adjust to reality when it comes to real estate.  Although the growth in our region is exceptional now, it has never been possible to get just what you want in our tiny Vashon real estate market.  There are just too few homes and property for sale at any given time, high demand, and our population doesn’t turn over quickly.

I often say that nobody gets the house they really want here.  Folks that are highly motived to live in our community settle for the best house and property that they can afford.  The point is to be on Vashon Island, not to have the perfect house.