Financing in 01801>Question Details

Rui Cabral, Home Buyer in Andover, MA

How do I buy a house with no income (job loss) but have enough cash assets to even pay cash for new house.?

Asked by Rui Cabral, Andover, MA Tue Sep 22, 2009

I have a question on financing a house. Single family or a townhouse. I was employed till last week (mid-Sept). So I have my 2008 W-2 and pay stubs through mid Sept 2009. Also I have cash to even buy the property outright. But do not want to do this and have my money tied up. I have enough cash that I can show and a 750 credit score.

My question: Is there a chance that I can find a bank or credit union to give me a mortgage by looking at my liquid assets though I have no income now? Also will a mortgage company take unemployment insurance payments as part of income calculations? Clearly when I am asked on my mortgage application the name of my employer I cannot lie since I am no loner employed by my employer. I understand the days of non-doc loans are gone.

Thanks.

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Rui Cabral’s answer
I will call you Ken. I like to know how much higher are the rates going to be and the
Terms of the transaction.

Thanks for nuggets of wisdom folks. This is great and let us just hope the economy
and housing pick by spring next year.
0 votes Thank Flag Link Fri Sep 25, 2009
Hi Rui- You're rental theory would only work if you do in fact rent it out, which it doesn't appear you are. And on a single family home, the rental income almost never covers the expenses on the property, including the mortgage PRIN and INT payments...
We do business with 1 niche lender who DOES do stated income/ verified assets loans- so that is a possiblity. But the rates are going to be higher than what the typical market rates are. If you'd like more info, please contact me. Thanks,

Ken L.
0 votes Thank Flag Link Fri Sep 25, 2009
What about a commercial loan folks? I am told they do not much care for the income but
want to make sure the rent on the property (let us say I am buying this as something I plan on renting out)
will cover expenses. The downside is you need something like a 25% down, pre-payment penalty,
and will get a 5 or 10 year fixed. Which is fine since I do plan on getting employed once this economy
turns around.
0 votes Thank Flag Link Thu Sep 24, 2009
Rui,

If you can afford to pay cash for a home, this is clearly the best route to go....on the other hand, if you are not willing to part with the capital you currently have other options must be explored.

The likelyhood of a lender providing a loan to an unemployed individual are very slim regardless of what assets are. These are times of accountability for lenders as well as borrowers and banks and their lending practices are under close scrutiny.

Many people in your similar situation are seeking a "lease purchase" arrangement that allows them the best of both worlds by renting with an agreement to purchase the property. A percentage of the rent is normally credited toward the agreed purchase price.

Good luck
0 votes Thank Flag Link Thu Sep 24, 2009
You should speak to your bank, credit union or a qualified mortgage broker to best answer your question. Lenders will look at all your paperwork (W2s, tax returns, assets, etc,) but they most want to know the likelihood of FUTURE ability to pay and compare your debts and liabilities to cashflow. Good luck. Cleo Pappas at CallCleo.com
0 votes Thank Flag Link Tue Sep 22, 2009
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