All Forum Posts by: Curtis H.

@Jay Hinrichs

In this case, the builder was the devil. Sorry. 

@Chris Mason

I think what you described was EXACTLY what happened. I was looking for the news article and found it the headline and the first sentence, but you needed a login to see the rest. So the article is still out there. When I was reading your post it was like reliving it all over again. I think you are spot on. So in that case, even as you describe it now, it is STILL capable of fooling most people on their FIRST home purcahse. That's the key here Jay, this was most people's FIRST time buying a home, FIRST time seeing the word escrow, FIRST time seeing PITI, etc. I mean really, how the hell are they supposed to know? One other note. I was NOT subprime, and I did not have trouble qualifying for the loan. This was simply a case of a builder being tricky to sell all the homes in the subdivision, selling the mortgages and bolting. The only fault I see on the buyer side here is not seeing the conflict of interest of using the "in house" lender.

@Jay Hinrichs

I agree and disagree with you. Mostly disagree :-)

I agree the buyers (including myself) should have been more aware, but to act like the seller (who was the builder) had no responsibility in this is a bit surprising. If they were so innocent they wouldn't have gotten sued (and settled), and wouldn't have been on the 7oclock news as part of a secret investigation. I will say I don't honestly remember if it was the taxes or not. Maybe they rolled the first 24 months of taxes into the loan to keep the payments low, and then after that the money needed to be put in the escrow account. I don't know. It was sneaky, no doubt about it. Not even a discussion really. 

Ask yourself when you or many of your relatives were 19 and 20 if someone played escrow games on their very first home purchase would they have caught it? Most people think...I make "X" amount a month, and my payment is "Y" amount a month for the next 30 years. Can I afford that yes or no? It seems real simple. I even put 20% down as a 21 year old to avoid PMI! I was pretty damn smart now that I think about it. And they STILL pulled a fast one on me. These were 30 year fixed mortgages, nothing fancy to make the numbers work, nor was it ever implied that a monthly payment could increase or would increase.

@Casey Mericle

I guess I could find a private lender, but remember I live in CA, so home prices are in the $500K range and that is not money someone parts with easily to someone who is not a full time investor.

Paul Parker From what I read if you hold a HELOC but don't borrow against it in most cases that won't hurt you much. Like having a credit card with a zero balance. However it seems not ALL lenders report to the credit agencies this way, so you have to ask them up front if you have a zero balance how do they report to the agencies.

I hear that lenders don't like for you to use these for your down payments. Is that most lenders or a few lenders? Also, if so, are people putting the funds in their account say 3 months or more in advance so there is no new deposit that shows in their account. I know people are using HELOC to fund down payments, I'm just curious if there are any hurdles to overcome.

@Mindy Jensen

I had a bad experience with my first home purchase 16 years ago where KB Homes financed and sold a whole subdivision of houses with some shady practices. I think it had something to do with the taxes not being part of the loan but not informing the borrowers. Well a few years later they sold all the mortgages to Citimortgage who immediately rolled all the back owed taxes into everyone's payment. People's mortgage went up an average of $500. On a $150K house that's a big jump. Half the subdivision went into foreclosure, it was on the news, KB got sued, etc. It was really sad to watch neighbors one by one pack up and leave. I made California money living in Texas, which was the only reason why I was able to pay the additional $500 a month for a full year and a half. From a financial standpoint, I still own that home as a rental. It has appreciated $40K or so in 15 years, which is FAR BELOW what the Austin/Round Rock area has appreciated if you bought a home there 15 years ago. In fact it's one of the worst areas because all the homes that went to foreclosure got bought by investors and rented out. So the area is 65% rentals although they are all houses. So yes, it cost me a lot of money in appreciation.  I know it's not ALL because the mortgages were sold, but I'm still scarred!

@Paul Parker

The simple and truthful answer as to why I don't do a cash out refi...I don't want the temptation of $200K sitting in a bank account. I have a lot of things that can be done to my primary residence that aren't needs, but wants. If me and my wife know we have $200K at our fingertips, that can be very dangerous, and how we have seen many people get into trouble during the crash. A car here, remodel there, and boom you are in trouble.

Chris Mason Thanks for the honest reply. The thing I like about this lender is they service almost all their loans. So the likelihood of my loan being sold 3 times is pretty low. But I agree the risk is there and I could be flagged as a shady borrower so for this one I should just go elsewhere and use them for portfolio loans on my rentals. I am in the best shape of my life financially with high W2 income for two years and excellent credit, so I'm sure I could get good rates many places on the refinance.

Chris Mason Sorry getting used to this tagging thing.

Thanks Chris. Would it be a bad idea to refinance with the same lender I'm currently paying? They actually are really good. Curious if others have done this.

Hello BP, 

I currently live in a home I picked up Sub2 about 2 years ago. The goal was to buy it, live in it while fixing it up with some sweat equity, and sell with no capital gains tax. Find a new place creatively, and do it all again. However, we love the area and now want to stay put. So after renovations and paying down the mortgage, we are sitting on about $200K minimum worth of equity.

I want to tap into the equity using a HELOC and pick up a couple rentals in TX where I have some already. However, in order to get a HELOC I would have to refinance first to get the loan in my name.

Is this a pretty straight forward process? Do I refinance first, then get a HELOC once that's complete?