I am down to the last two pieces of my real estate puzzle; two personal residences once valued at a combined total of roughly $2.9M, currently believed to be worth less than half that. And still possibly not done falling. A friend who today still buys and sells millions in real estate gave me his honest opinion of that last home's value recently, and it was not pretty.
We have been living in one house, renting the other, but have sold the one we are in as a short sale and the closing is this week. Our tenant in the other house was days from eviction recently, due to non-payment, but agreed to leave on his own. And since the timing is somewhat right, but still reluctantly, we are headed back to live in what we once believed would be our final home.
That house is also currently listed for sale, and despite the huge depreciation, the price tag is still greater than what we would consider reasonable for our current situation. (Although many professional opinions say it will not bring anywhere near the asking price).
It was another part of my life I have been somewhat trying to avoid, and hesitated to consider the move due to the possible psychological issues related to a perceived failure in life, but I drove over and walked through every door of the house recently, did not seem to phase me. It is a cool house, but it has not been maintained properly by the tenant of the past two years, and so looks far less spectacular than what I remembered. I bought it in very bad condition years ago, but the location was incredible, and then poured a lot of time and money into making it exactly what my wife and I wanted it to be. It was not a project "for profit", but rather "for living", and as such there are many aspects that are somewhat an outward expression of who we are, or were.
Since technically our occupancy will once again qualify it as our "personal residence", I have become curious how lenders might view trading income. I know that rental income was only good for 70-80% of actual, so would futures trading be a far less percentage, or would they consider it at all? If those lenders told me (as if they were good communicators...) that if I made X more they could consider a loan modification that might put the home within a comfortable reach again, would the house itself become a temptation to create that additional income?
That is really my concern relavant to this journal; that I not allow myself to be convinced that I need to step up my trading for any reason other than I am ready to do so. And therefore, will probably step down again next week to not have so much going on in my mind. Or even not trade for a few days and focus on being aware?
Undecided right now. But an issue to take very seriously.
Last edited by GaryD; April 7th, 2012 at 08:37 PM.
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I purchased a second home to rent out in the last few years, which as you know is harder to qualify for than a primary home. Lender did not seem to flinch about source of income, just wanted to look at a few years of W2's and all the usual checking, savings, retirement accounts (and trading accounts), etc.
I hope everything goes smoothly with your move. I hate moving. I want my next move to be my final destination. Bury me in the backyard, I'm done.
Just to help me keep my eye on the prize. I hope to be there and technically "retired" (no income needed to live), within the next 5 years (a nice 40th birthday present to myself, if I can do it).
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The Easter weekend brought with it a gap down from Thursday's close, most likely a delayed reaction to Friday's employment report.
On the short side, I am watching the higher of the two red low pivots, and do not include that area into support tonight, giving preference to the blue zone. A break below 101.35 may be enough to propel through the 101 area. Stronger confluence for higher timefraame support continues to reside in the area of 99.40 - 99.70.
On the upside, a break above 103.40 should bring continuation, and if the blue zone holds and reverses may present an opportunity to catch that ride a little early and/or benefit from a potential gap fill.
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Generally from what I've dealt with, it was more of a liquidity snapshot that they were most interested in. Underwriters have typically requested up to 3 years of tax returns. I utilize business entities for my investments which makes it even more complicated but the gist would typically be evidence of liquidity coupled with 3 years of consistent income on your tax returns. I've always worked with a private bank for my financing which allowed for more creative underwriting and loan terms. If you're working with a cookie cutter lender, you may have a hard time getting them to understand your income. They may discount your income to a degree but I would imagine that will vary dependent upon which bank you're working with. A bank looking to sell the mortgage immediately will most likely be more difficult to deal with vs. a bank looking to portfolio the loan. I'm not familiar with the banks out there but obviously just shop around to those that may cater to the investment community more such as a Northern Trust, etc.
Best of luck with the move. By the way, don't let the monetary pressures change the way you approach your trading. The market doesn't care about what our obligations are. Just keep doing what you're doing and maintain the same mental approach you've always had and you'll be fine.
Update: I think I misunderstood what you were talking about. Sorry about that. I thought you were looking for a way to refinance a mortgage with a trader's income as the primary source of reference. I'm not familiar with loan modifications as you mentioned but definitely do your due diligence as always.
Last edited by Private Banker; April 8th, 2012 at 09:27 PM.
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I have given it every opportunity to show it cared in the past. I do know better today, but just recorded it here this weekend to solidify it somewhat. There is a lot of energy in that house. It was the end goal of something I started 10 years prior to finding it. I don't want it teaming up with crude oil against me.
I am far too familiar with them; 3 approvals, 3x as many denied, one approved then withdrawn... but last week I requested the paperwork anyway...
Thanks for adding to the strength of the post.
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