Comments on: The Simple Dollar Morning Roundup: Preapproval Craziness Edition http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/ Simple, applicable personal finance advice for the modern world Sun, 22 Nov 2009 01:08:33 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: KMull http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/comment-page-1/#comment-32977 KMull Fri, 08 Jun 2007 12:15:00 +0000 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/#comment-32977 I'm a little late on this, but we're going through the same process. It's crazy. I’m a little late on this, but we’re going through the same process. It’s crazy.

]]> By: ck_dex http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/comment-page-1/#comment-24414 ck_dex Thu, 10 May 2007 13:54:21 +0000 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/#comment-24414 "When Is It OK to Stop Saving" is an odd little piece. The author wants to be able to replace 100% of income upon retirement, but then goes on to talk about wanting to establish a "family fortune". Last year I read a couple of decent books which address establishing and growing family foundations, trusts and fortunes: "Family Wealth" by James E. Hughes, Jr. and "Wealth" by Stuart E. Lucas. "Wealth" was especially good, but it proposed that to grow a family fortune, spending must be limited to between 1.8% - 2.4% of funds each year, SIGNIFICANTLY less than the 4% - 6% spend down limit recommended for retirees who want their savings to last 20-30 years. I don't doubt that $1.15 million is enough for a frugal person to live on for the rest of his/her life--Joe Dominguez, who wrote "Your Money or Your Life", lived on the interest of his $100K savings for decades (though he was earning 15% on his 30-yr bonds bought back in the 70s). But there's a big difference between living on $21K versus $70K. So "Enough Wealth" needs to be young and enjoying a very healthy income in order to meet the goal of establishing a family fortune on savings alone. Good luck with the house! “When Is It OK to Stop Saving” is an odd little piece. The author wants to be able to replace 100% of income upon retirement, but then goes on to talk about wanting to establish a “family fortune”.

Last year I read a couple of decent books which address establishing and growing family foundations, trusts and fortunes:

“Family Wealth” by James E. Hughes, Jr. and “Wealth” by Stuart E. Lucas. “Wealth” was especially good, but it proposed that to grow a family fortune, spending must be limited to between 1.8% – 2.4% of funds each year, SIGNIFICANTLY less than the 4% – 6% spend down limit recommended for retirees who want their savings to last 20-30 years.

I don’t doubt that $1.15 million is enough for a frugal person to live on for the rest of his/her life–Joe Dominguez, who wrote “Your Money or Your Life”, lived on the interest of his $100K savings for decades (though he was earning 15% on his 30-yr bonds bought back in the 70s). But there’s a big difference between living on $21K versus $70K.

So “Enough Wealth” needs to be young and enjoying a very healthy income in order to meet the goal of establishing a family fortune on savings alone.

Good luck with the house!

]]> By: laurak http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/comment-page-1/#comment-24304 laurak Thu, 10 May 2007 02:56:11 +0000 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/#comment-24304 I had the same experience when I got pre-approved about two years ago. I told the folks at the bank they were crazy to approve me for what, at the time, was more than 5-1/2 times my salary! Well, I guess that's why foreclosures are taking off the way they are. It's sad that so many people were bamboozled in the process. You've already crunched the numbers, so you must know what you can afford comfortably and what would be a stretch (but do-able) for the right place. Stick to your guns, and you will be happy you did. I'm sure you'll do a great job! I had the same experience when I got pre-approved about two years ago. I told the folks at the bank they were crazy to approve me for what, at the time, was more than 5-1/2 times my salary! Well, I guess that’s why foreclosures are taking off the way they are. It’s sad that so many people were bamboozled in the process.

You’ve already crunched the numbers, so you must know what you can afford comfortably and what would be a stretch (but do-able) for the right place. Stick to your guns, and you will be happy you did. I’m sure you’ll do a great job!

]]> By: Jamie http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/comment-page-1/#comment-24235 Jamie Wed, 09 May 2007 21:28:28 +0000 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/#comment-24235 Good luck. My wife and I just took the plunge ourselves at the end of March. Fun, fun stuff! The thing that burned us (but not really) was wanting the house bad enough that we were willing to pay fairly close to asking, and not request a lot of simple little repairs and things that the previous owner could have had fixed. May have saved us some time. I'd say it's impossible to remove yourself emotionally from buying a house as a primary residence. Doesn't mean you shouldn't try though. In the end, I feel like we "rolled over". We do love the house though. :) Good luck. My wife and I just took the plunge ourselves at the end of March. Fun, fun stuff! The thing that burned us (but not really) was wanting the house bad enough that we were willing to pay fairly close to asking, and not request a lot of simple little repairs and things that the previous owner could have had fixed. May have saved us some time. I’d say it’s impossible to remove yourself emotionally from buying a house as a primary residence. Doesn’t mean you shouldn’t try though. In the end, I feel like we “rolled over”.

We do love the house though. :)

]]> By: GHoosdum http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/comment-page-1/#comment-24208 GHoosdum Wed, 09 May 2007 19:32:57 +0000 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/#comment-24208 I know you've done your research, so I am confident you'll do well. All the same, good luck with the loans and the house purchase! I know you’ve done your research, so I am confident you’ll do well. All the same, good luck with the loans and the house purchase!

]]> By: UncleOxidant http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/comment-page-1/#comment-24184 UncleOxidant Wed, 09 May 2007 17:16:40 +0000 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/#comment-24184 Trent: Careful. These days mortgage brokers will tell you just about anything. They're goal is to get you to take out the biggest loan possible so as to help their commission. You can't trust them. Do your own calculations. Your house payment shouldn't exceed 25% of your income. Also, don't become emotionally invested in any house. Try to remain detached from the property as much as possible - Realtors can smell attachement a mile away and that will hurt your chances at negotiation. It's a buyers market now, so you should go in and after a thorough look at the place point out all the flaws to the seller and offer at least 10% under what they're asking. If the seller doesn't take it then walk away. If after a few days you decide that you really would like that house, then go back and offer 5% under. ...but again, don't get emotionally attached to any property you're looking at. If you don't get this house there will be others like it. And there will probably be better deals as time goes on, so there's really no rush to buy. If you can keep that state of mind while looking for a house you'll likely get a better deal. Trent: Careful. These days mortgage brokers will tell you just about anything. They’re goal is to get you to take out the biggest loan possible so as to help their commission. You can’t trust them. Do your own calculations. Your house payment shouldn’t exceed 25% of your income.

Also, don’t become emotionally invested in any house. Try to remain detached from the property as much as possible – Realtors can smell attachement a mile away and that will hurt your chances at negotiation. It’s a buyers market now, so you should go in and after a thorough look at the place point out all the flaws to the seller and offer at least 10% under what they’re asking. If the seller doesn’t take it then walk away. If after a few days you decide that you really would like that house, then go back and offer 5% under.

…but again, don’t get emotionally attached to any property you’re looking at. If you don’t get this house there will be others like it. And there will probably be better deals as time goes on, so there’s really no rush to buy. If you can keep that state of mind while looking for a house you’ll likely get a better deal.

]]> By: TiP http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/comment-page-1/#comment-24157 TiP Wed, 09 May 2007 15:50:28 +0000 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/#comment-24157 Back when I was looking to buy a house (about 6 months ago) I was always astonished at what the mortgage folks would say I could qualify for - it was almost like they didn't care if they got paid back. That's partly what led me to think that something was rotten in the whole mortgage/home selling industry and that's why I'm not currently looking to buy. Instead I'm awaiting things to get worse in the housing industry and then maybe buy in 2008 or 2009 with a solid 20% down - there should be some nice deals then as foreclosures continue to rise adding to already bloated inventory. Trent: did the mortgage people offer you a piggyback loan options (a first and second mortgage so as to avoid PMI)? Word on the street is that those are an endangered species at this point. Back when I was looking to buy a house (about 6 months ago) I was always astonished at what the mortgage folks would say I could qualify for – it was almost like they didn’t care if they got paid back. That’s partly what led me to think that something was rotten in the whole mortgage/home selling industry and that’s why I’m not currently looking to buy. Instead I’m awaiting things to get worse in the housing industry and then maybe buy in 2008 or 2009 with a solid 20% down – there should be some nice deals then as foreclosures continue to rise adding to already bloated inventory.

Trent: did the mortgage people offer you a piggyback loan options (a first and second mortgage so as to avoid PMI)? Word on the street is that those are an endangered species at this point.

]]> By: imelda72 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/comment-page-1/#comment-24144 imelda72 Wed, 09 May 2007 14:51:24 +0000 http://www.thesimpledollar.com/2007/05/09/the-simple-dollar-morning-roundup-preapproval-craziness-edition/#comment-24144 Good luck with that house!! Good luck with that house!!

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