Mortgage Problems for First Year Biglaw?

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Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 10:48 am

I am a 3L, married, and currently own a home near my school. My debt level is average.

I'm starting secondary market Biglaw in September. The plan is, and has always been, to move there in August (job is about 250 miles from school).

I have been working with a realtor there since October and his preferred lender since February.

Everything has been going swimmingly and we were all set to go there next week to shop around and perhaps even make an offer, since we may be looking at short sales and those things take time.

Suddenly I get a call from him yesterday saying "Wait, you're moving in August for a job in September? You won't be working, so that won't work!" He has my offer letter, we have good 750+ credit scores, and have shown we have plenty of capital to close.

There are apparently also concerns, again, raised for the first time yesterday after months of stringing me along, that there are concerns about my student debt load.

I haven't felt this helpless since the job search waiting game. How are other people, particularly in markets where buying is a possibility, handling this?

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IAFG
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Re: Mortgage Problems for First Year Biglaw?

Postby IAFG » Sat Mar 24, 2012 10:52 am

I don't understand the rush to buy again, especially if you're looking at shortsales. Why don't you just get a short term lease or sublet for a few months? Seems like that would help with the financing too, since fatter DPs generally do.

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Re: Mortgage Problems for First Year Biglaw?

Postby The Duck » Sat Mar 24, 2012 10:54 am

Why is your realtor giving you advice on mortgages? You should always get pre-qualified before you even begin shopping. Then you know what you qualify for... And it puts you in a better position for making an offer. When buying, I've had my offer chosen over a similar one because I had a cash equivalent certificate. When selling, I always prefer the guy I know who can get financing so the deal doesn't fall apart.

Call a lender and see what they say. They're who matters.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 11:03 am

IAFG wrote:I don't understand the rush to buy again, especially if you're looking at shortsales. Why don't you just get a short term lease or sublet for a few months? Seems like that would help with the financing too, since fatter DPs generally do.


My firm will only pay for one move. I'd prefer it be to the final house and not to storage/apartment/etc.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 11:05 am

The Duck wrote:Why is your realtor giving you advice on mortgages? You should always get pre-qualified before you even begin shopping. Then you know what you qualify for... And it puts you in a better position for making an offer. When buying, I've had my offer chosen over a similar one because I had a cash equivalent certificate. When selling, I always prefer the guy I know who can get financing so the deal doesn't fall apart.

Call a lender and see what they say. They're who matters.


There is a lender involved here, the lender and realtor are a team.

The lender actually told me on the phone and by email a month ago that "you are prequalified for sure for X (amount well over what I need)"

Now, a month later, with a quasi-nonrefundable firm-sponsored relocation trip 5 days away, it's all falling through.

The lender is going back to the underwriters Monday morning to see if this can be salvaged, but there's no guarantee. I am trying to line up backup lenders, but who knows if I will find one.

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Re: Mortgage Problems for First Year Biglaw?

Postby The Duck » Sat Mar 24, 2012 11:28 am

Anonymous User wrote:
The Duck wrote:Why is your realtor giving you advice on mortgages? You should always get pre-qualified before you even begin shopping. Then you know what you qualify for... And it puts you in a better position for making an offer. When buying, I've had my offer chosen over a similar one because I had a cash equivalent certificate. When selling, I always prefer the guy I know who can get financing so the deal doesn't fall apart.

Call a lender and see what they say. They're who matters.


There is a lender involved here, the lender and realtor are a team.

The lender actually told me on the phone and by email a month ago that "you are prequalified for sure for X (amount well over what I need)"

Now, a month later, with a quasi-nonrefundable firm-sponsored relocation trip 5 days away, it's all falling through.

The lender is going back to the underwriters Monday morning to see if this can be salvaged, but there's no guarantee. I am trying to line up backup lenders, but who knows if I will find one.


It seems to me this would happen all the time when people relocate to assume a new job. Maybe something from the firm would help?

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 12:19 pm

The Duck wrote:
Anonymous User wrote:
The Duck wrote:Why is your realtor giving you advice on mortgages? You should always get pre-qualified before you even begin shopping. Then you know what you qualify for... And it puts you in a better position for making an offer. When buying, I've had my offer chosen over a similar one because I had a cash equivalent certificate. When selling, I always prefer the guy I know who can get financing so the deal doesn't fall apart.

Call a lender and see what they say. They're who matters.


There is a lender involved here, the lender and realtor are a team.

The lender actually told me on the phone and by email a month ago that "you are prequalified for sure for X (amount well over what I need)"

Now, a month later, with a quasi-nonrefundable firm-sponsored relocation trip 5 days away, it's all falling through.

The lender is going back to the underwriters Monday morning to see if this can be salvaged, but there's no guarantee. I am trying to line up backup lenders, but who knows if I will find one.


It seems to me this would happen all the time when people relocate to assume a new job. Maybe something from the firm would help?


This is exactly what I asked the realtor on the phone yesterday and he didn't have a very good answer. Apparently lenders are more willing to float it when you are taking a new job in the same "industry" - so obviously someone straight out of law school won't count.

Like job listings...the usual "Attorneys wanted - 1-3 years of experience required" with no way to gain experience.

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Re: Mortgage Problems for First Year Biglaw?

Postby IAFG » Sat Mar 24, 2012 12:36 pm

Anonymous User wrote:
IAFG wrote:I don't understand the rush to buy again, especially if you're looking at shortsales. Why don't you just get a short term lease or sublet for a few months? Seems like that would help with the financing too, since fatter DPs generally do.


My firm will only pay for one move. I'd prefer it be to the final house and not to storage/apartment/etc.

Eh storage is a pretty minor expense though really. I don't know why you're surprised that you're running into trouble here, guy straight out of school starting a new job isn't the safest bet ever, even when that new job pays six figures.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 12:40 pm

IAFG wrote:
Anonymous User wrote:
IAFG wrote:I don't understand the rush to buy again, especially if you're looking at shortsales. Why don't you just get a short term lease or sublet for a few months? Seems like that would help with the financing too, since fatter DPs generally do.


My firm will only pay for one move. I'd prefer it be to the final house and not to storage/apartment/etc.

Eh storage is a pretty minor expense though really. I don't know why you're surprised that you're running into trouble here, guy straight out of school starting a new job isn't the safest bet ever, even when that new job pays six figures.


I hear you, but I'm not straight through, had work experience before law school, and my wife has worked continuously. We've also held a mortgage for three years, paid off two cars in that span, etc. We're a risky bet, but damn, I didn't think this risky.

I mean they'll let me move the day I'm on the payroll, no question, and if that's what we have to do, that's what we'll do. I would just rather not be getting oriented at the firm and coming home to boxes every night.

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IAFG
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Re: Mortgage Problems for First Year Biglaw?

Postby IAFG » Sat Mar 24, 2012 12:53 pm

Yeah I definitely hear you, it's a frustrating situation. If you hold off a little while (and grow your DP) you'll probably end up with a better financing deal anyway. Or, maybe when they go back and look at your financials, the combo of your wife's income and your starting salary will be enough to cover it. If it's really a matter of a few weeks though, maybe you could not move your stuff out of the old house, cut a deal with a hotel for an extended stay or sublet a furnished apartment for a couple months, and just put the whole move off a short while.

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Re: Mortgage Problems for First Year Biglaw?

Postby imchuckbass58 » Sat Mar 24, 2012 4:33 pm

You really should shop around for lenders, instead of just accepting the realtor's lender just because he said so.

-First, there's a chance another lender will pre-approve you even though you'll have a month or so before you start work.

-Second, you are probably getting ripped off if you are just using the realtor's lender. Terms are almost always considerably worse than if you shop around.

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Re: Mortgage Problems for First Year Biglaw?

Postby sunynp » Sat Mar 24, 2012 4:37 pm

Doesn't your firm have a relationship with a bank? They might be able to help you with a lender.

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Re: Mortgage Problems for First Year Biglaw?

Postby Julio_El_Chavo » Sat Mar 24, 2012 4:39 pm

The only reason to buy a house is if you want to live in a certain area for over 10-15 years. There's a high likelihood that you will have to find employment in a different area after a few years of biglaw, so I don't really know why you're set on buying.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 4:55 pm

imchuckbass58 wrote:You really should shop around for lenders, instead of just accepting the realtor's lender just because he said so.

-First, there's a chance another lender will pre-approve you even though you'll have a month or so before you start work.

-Second, you are probably getting ripped off if you are just using the realtor's lender. Terms are almost always considerably worse than if you shop around.


After yesterday I now have a backup list, so if things aren't fixed by Monday evening I will go with one of them. The rate I was quoted is quite good given the market, so I'm not that concerned on that front.


Julio_El_Chavo wrote:The only reason to buy a house is if you want to live in a certain area for over 10-15 years. There's a high likelihood that you will have to find employment in a different area after a few years of biglaw, so I don't really know why you're set on buying.


This is a fair point, but renting is honestly a last resort. Having owned my own home for three years, I am not eager to move back into an apartment. This is a major metro area where rent is not any lower than a mortgage payment and houses come on and off the market with ease. If I do need to move, I'll have no issue selling (my current house, meh)

I rented for eight years before law school. That was enough. Shitty landlords, shitty roommates, shitty neighbors. I'm a hermit now, for better or worse.

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Re: Mortgage Problems for First Year Biglaw?

Postby RobotGardener » Sat Mar 24, 2012 5:06 pm

Your plan is stupid. You are going to get a very unfavorable interest rate (and payment) from anyone willing to lend to someone with less than 12 months of work history. The fact that you are in school is a mitigating factor but from an underwriting perspective this is a no go. If you do find a lender to lend to you before you even start working the terms will be considerably less favorable than if you waited a year. And if you refinance in a year to get those more favorable terms then you will have to pay loan closing costs again which run from 2-4k per mortgage.

You should have done some research before just assuming you could buy again with no employment history.

TL:DR Rent for a year.

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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Sat Mar 24, 2012 5:17 pm

As a side note (a little too late for OP) never ever use a mortgage broker who works with your realtor - its a sure fire way to get screwed over (never ever discuss finances with a realtor, beyond providing a pre-qualification letter, and even that should be only in the amount you want to spend, not the amount you are qualified for)

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 5:18 pm

RobotGardener wrote:Your plan is stupid. You are going to get a very unfavorable interest rate (and payment) from anyone willing to lend to someone with less than 12 months of work history. The fact that you are in school is a mitigating factor but from an underwriting perspective this is a no go. If you do find a lender to lend to you before you even start working the terms will be considerably less favorable than if you waited a year. And if you refinance in a year to get those more favorable terms then you will have to pay loan closing costs again which run from 2-4k per mortgage.

You should have done some research before just assuming you could buy again with no employment history.

TL:DR Rent for a year.


Thanks for your concern and scorn. That "research" was undertaken A) last summer when I spent weekends during my SA researching the market, neighborhoods, etc., and B) during the six months I have known (or thought I knew) this realtor and lender.

I was approved at a rate under 4% for a 30 yr fixed. I'm simply not concerned about whether this is a good deal or not to you, because for me and my wife it is. Without getting into a broader rent v buy debate, the tax deduction and building equity is simply more valuable to me than renting in a place I will not enjoy and will live in for only a few months.

The issue here is simply whether I will be approved in august v. September. Even worst case scenario with this lender, I'll close the first weekend of my job. I'll be in a hotel for training the first week anyway, so this isn't that big a deal long term. It just changes a lot of plans and will be inconvenient.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 5:19 pm

dingbat wrote:As a side note (a little too late for OP) never ever use a mortgage broker who works with your realtor - its a sure fire way to get screwed over (never ever discuss finances with a realtor, beyond providing a pre-qualification letter, and even that should be only in the amount you want to spend, not the amount you are qualified for)


I described them as a team, but they simply work together extremely frequently. They are not in business together and the realtor has not been given any financials other than our price range.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 5:36 pm

RobotGardener wrote:Your plan is stupid. You are going to get a very unfavorable interest rate (and payment) from anyone willing to lend to someone with less than 12 months of work history. The fact that you are in school is a mitigating factor but from an underwriting perspective this is a no go. If you do find a lender to lend to you before you even start working the terms will be considerably less favorable than if you waited a year. And if you refinance in a year to get those more favorable terms then you will have to pay loan closing costs again which run from 2-4k per mortgage.

You should have done some research before just assuming you could buy again with no employment history.


OP Anonymous User wrote:I hear you, but I'm not straight through, had work experience before law school, and my wife has worked continuously. We've also held a mortgage for three years, paid off two cars in that span, etc. We're a risky bet, but damn, I didn't think this risky.

. . .


RC fail there.

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Re: Mortgage Problems for First Year Biglaw?

Postby RobotGardener » Sat Mar 24, 2012 5:41 pm

Anonymous User wrote:
RobotGardener wrote:Your plan is stupid. You are going to get a very unfavorable interest rate (and payment) from anyone willing to lend to someone with less than 12 months of work history. The fact that you are in school is a mitigating factor but from an underwriting perspective this is a no go. If you do find a lender to lend to you before you even start working the terms will be considerably less favorable than if you waited a year. And if you refinance in a year to get those more favorable terms then you will have to pay loan closing costs again which run from 2-4k per mortgage.

You should have done some research before just assuming you could buy again with no employment history.

TL:DR Rent for a year.


Thanks for your concern and scorn. That "research" was undertaken A) last summer when I spent weekends during my SA researching the market, neighborhoods, etc., and B) during the six months I have known (or thought I knew) this realtor and lender.

I was approved at a rate under 4% for a 30 yr fixed. I'm simply not concerned about whether this is a good deal or not to you, because for me and my wife it is. Without getting into a broader rent v buy debate, the tax deduction and building equity is simply more valuable to me than renting in a place I will not enjoy and will live in for only a few months.

The issue here is simply whether I will be approved in august v. September. Even worst case scenario with this lender, I'll close the first weekend of my job. I'll be in a hotel for training the first week anyway, so this isn't that big a deal long term. It just changes a lot of plans and will be inconvenient.


I don't think you understand how this works. Right now all you have is a pre-approval and a pre-approval means nothing. There is no underwriting involved with a pre-approval. A pre-approval just looks at your credit score and your stated income and debts and estimates if you will be approved for a loan in your price range based on those factors.

The interest rate you were quoted is in no way final. Even if you "locked" the rate it is contingent upon the underwriting.

I am sure your loan office/mortgage broker told you your situation would be fine because it is his job to sell loans (not to underwrite them). The underwriter is actually looking at this situation from the lender's perspective, a risk assessment perspective. The one month difference probably means very little to them. I am going to guess that you are going to encounter problems with the September date as well. Things will keep changing as you get closer to the date (that is the nature of approving loans). Remember that the loan officer/broker is a sales person first.

I am not trying to be a dick, I have just been through this before (twice) and I have worked in that industry.

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Re: Mortgage Problems for First Year Biglaw?

Postby RobotGardener » Sat Mar 24, 2012 5:42 pm

Anonymous User wrote:
RobotGardener wrote:Your plan is stupid. You are going to get a very unfavorable interest rate (and payment) from anyone willing to lend to someone with less than 12 months of work history. The fact that you are in school is a mitigating factor but from an underwriting perspective this is a no go. If you do find a lender to lend to you before you even start working the terms will be considerably less favorable than if you waited a year. And if you refinance in a year to get those more favorable terms then you will have to pay loan closing costs again which run from 2-4k per mortgage.

You should have done some research before just assuming you could buy again with no employment history.


OP Anonymous User wrote:I hear you, but I'm not straight through, had work experience before law school, and my wife has worked continuously. We've also held a mortgage for three years, paid off two cars in that span, etc. We're a risky bet, but damn, I didn't think this risky.

. . .


RC fail there.


For underwriting purposes only continual employment (usually in the same industry) matters.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 5:45 pm

RobotGardener wrote:
Anonymous User wrote:
RobotGardener wrote:Your plan is stupid. You are going to get a very unfavorable interest rate (and payment) from anyone willing to lend to someone with less than 12 months of work history. The fact that you are in school is a mitigating factor but from an underwriting perspective this is a no go. If you do find a lender to lend to you before you even start working the terms will be considerably less favorable than if you waited a year. And if you refinance in a year to get those more favorable terms then you will have to pay loan closing costs again which run from 2-4k per mortgage.

You should have done some research before just assuming you could buy again with no employment history.

TL:DR Rent for a year.


Thanks for your concern and scorn. That "research" was undertaken A) last summer when I spent weekends during my SA researching the market, neighborhoods, etc., and B) during the six months I have known (or thought I knew) this realtor and lender.

I was approved at a rate under 4% for a 30 yr fixed. I'm simply not concerned about whether this is a good deal or not to you, because for me and my wife it is. Without getting into a broader rent v buy debate, the tax deduction and building equity is simply more valuable to me than renting in a place I will not enjoy and will live in for only a few months.

The issue here is simply whether I will be approved in august v. September. Even worst case scenario with this lender, I'll close the first weekend of my job. I'll be in a hotel for training the first week anyway, so this isn't that big a deal long term. It just changes a lot of plans and will be inconvenient.


I don't think you understand how this works. Right now all you have is a pre-approval and a pre-approval means nothing. There is no underwriting involved with a pre-approval. A pre-approval just looks at your credit score and your stated income and debts and estimates if you will be approved for a loan in your price range based on those factors.

The interest rate you were quoted is in no way final. Even if you "locked" the rate it is contingent upon the underwriting.

I am sure your loan office/mortgage broker told you your situation would be fine because it is his job to sell loans (not to underwrite them). The underwriter is actually looking at this situation from the lender's perspective, a risk assessment perspective. The one month difference probably means very little to them. I am going to guess that you are going to encounter problems with the September date as well. Things will keep changing as you get closer to the date (that is the nature of approving loans). Remember that the loan officer/broker is a sales person first.

I am not trying to be a dick, I have just been through this before (twice) and I have worked in that industry.


I can't quibble much with this, and thanks (this time) for the insight. You may well be right. I am at least a little heartened by the fact that at least two first-years from my firm have gotten approved in the same neighborhood I'm looking in with relatively similar financials, debt, etc.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 6:04 pm

RobotGardener wrote: . . .
For underwriting purposes only continual employment (usually in the same industry) matters.


No, continual isn't always necessary.
"Industry" can be so broad it's a joke.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Sat Mar 24, 2012 6:23 pm

I am also facing a similar situation. I am a bit older, had a career before law school, rented for years. I have excellent credit My wife has also been employed in a solid state university job while I was in law school. We have a DP to buy a house, we are relocating to near my firm in another city.

I have talked to banks about loans and the answer I got was my firm job's salary won't count till that income is filed on my taxes. They want 2 years of income history, promise of future employment or very recent employment does nothing in the underwriting calculation. So basically I am stuck trying to borrow based solely on my wife's income but yet my students loans will be factored in making borrowing difficult and impossible at a decent rate.

I have decided to rent for another year even though I want to buy ASAP. Once the biglaw salary starts rolling in, taxes are going to be high and housing deductions become quite valuable.

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Re: Mortgage Problems for First Year Biglaw?

Postby RobotGardener » Sat Mar 24, 2012 6:45 pm

Anonymous User wrote:
RobotGardener wrote: . . .
For underwriting purposes only continual employment (usually in the same industry) matters.


No, continual isn't always necessary.
"Industry" can be so broad it's a joke.


Post 2008, continual is always necessary for prime loans. Like I said, OP could find someone willing to take a chance on him for a higher interest rate but those kinds of lenders are rare (before 07 -08 they were plentiful).

It used to be that school counted in the 2 years of employment history calculation. Now it is just a mitigating factor for 90% conventional mortgages out there.

The post above this one is the typical underwriting situation for new hires post-financial crisis.




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