On Tuesday, I published a performance update where I talked about my home. I mentioned that one reason I wanted to improve my house was to show others that the street was coming up. In other words, I want to be a catalyst for people to improve their homes to bring up values:
I also wrote about how the home across the street in not-so-great condition sold for $300,000. Since the new owners closed on the home, they’ve been gutting it.
On Wednesday, the day after I published that post, I talked to the new owner, Chuck. This is how part of the conversation went down (I swear, I can’t make this stuff up):
- Me: I’m curious, why did you choose our street to live on?
- Chuck: We’ve been watching the street and your pop-top addition. We wanted to move to an area that is on the upswing. People are putting money into their homes here and we liked that, especially since we have big plans for our house here.
Ding! Ding!! Ding!!!
We have a winner! Johnny, tell Mr. 1500 what he’s won!
Mr. 1500 has won some delicious home price appreciation! He’ll sleep well at night knowing his home value is going up, up, up!
We received so many awesome answers to last week’s question. I don’t even know where to begin. With your help, I think we have the whole thing just about figured out.
OK, so over to Mrs. 1500 to recap last week’s answers to the question, Can I borrow some money?
If you recall, we offered some great incentives for those of you who would be willing to part with your Benjamins.
At the $0 level, earning a sneer from Spendosaurus and my Alanis Morissette, Milli Vanilli and Vanilla Ice tapes is Brian from Debt Discipline. Thanks Brian. I was actually surprised that more people didn’t join you.
Retired to Win Alex suggested setting up an auto-deposit from an IRA account to our checking account. When he went in to get a loan, his lender suggested either two years of income, OR 3 months of fixed income payments from an IRA or similar account. I have never heard of this before, but we are checking into it.
Even Steven teased us with the $50K lunch… Chris from Flipping a Dollar suggested getting a HELOC on our current house. A great idea for many, but our house isn’t finished yet. The perils of DIY.
Gen Y Finance Guy (every single time I read his name, I hear it sung to the Bill Nye the Science Guy theme…) Anyway, he had an idea I haven’t heard before – liquidate all our after tax investments and put them into a self-directed IRA that allows us to purchase rental properties.
Writing2reality suggested finding a wealthy person and kidnapping their child. That was our backup plan! OK, so he then went on to suggest bringing on a partner who has a consistent job and good credit. They can help us get the mortgage, and we could give them a pre-set buyout date when we could refinance into a mortgage we can qualify for ourselves. Another suggestion he had was to find someone we trust, have them put some money into it and then get a share of the profits. Yet another idea was a commercial loan, which we knew nothing about until…
Jason from Reaching Our Balance and ProfitProphet suggested contacting Churchill Mortgage from the Dave Ramsey show. We did contact them, but they aren’t able to give us a loan, either. They were really nice and took the time to explain that Fannie Mae wants two years of consistent employment, and since most banks sell their mortgages to Fannie Mae, they use those guidelines. They also went on to suggest we talk to a local credit union, and ask about a portfolio loan, because those loans aren’t sold, and therefore have a little more wiggle room in them.
So I emailed a lady in my real estate office who is also a mortgage lender for our local credit union. She reviewed our information and agreed that a typical residential mortgage isn’t going to work, but a commercial loan might work out. She gave me the contact information for the commercial side, and he feels that we should be able to work something out.
The commercial loan is at a slightly higher interest rate, and after 5 years it automatically readjusts to the current interest rate. After an additional 5 years, there is a balloon payment due, or we can refinance. Also, there is a prepayment penalty, which is almost unheard of in the residential side.
Also, no fewer than three people offered to partner with us on the deal, which is astounding. We didn’t really think anyone would give us money. So hey, we found this amazing deal for ocean front property in Arizona. Call us if you are interested!
Seriously, we don’t know what we are going to do about this. It is so great to get so many creative ideas from you all. We truly appreciate your taking the time to share with us.
Now, to today’s question. What do you look for when house shopping? Do you want an old, crappy home that you’re going to have to pour your heart, soul and wallet into? Or, do you prefer a new cookie cutter home that demands little more than mowing the lawn and paying your association dues? Or, something else altogether. We’ll tell you our thoughts on it next week after we hear from all of you.
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