0
0

Spouse’s income can’t be included for new loan..


 invite response                
2011 Jan 5, 8:31am   16,071 views  73 comments

by RC2006   ➕follow (2)   💰tip   ignore  

Well I guess I’m out of housing game for a while. I went to get a pre-approved and was told that I can’t count my wife’s income. She went back to work in March making same as I do and before that she stayed home for a year when my second son was born, aside from that she has never been unemployed even when she was in college and with first son. She needs to have two years employment with no gaps. I know they are stricter with loans but we both have spotless credit and 30k banked. The most I can get a loan for on my own is 270-300k. I will try another loan guy but I have the feeling nothing will change. Oh well maybe it’s a good thing all of her income is going to savings and I can hope that the market will crash more.

So any couple that had a spouse that stayed home to be with a child for a year is screwed.

#housing

Comments 1 - 40 of 73       Last »     Search these comments

1   FortWayne   2011 Jan 5, 9:07am  

no, you are not screwed. bank just did you a favor.

you are not supposed to count on the second income for the biggest loan you can get. You can't guarantee to the bank that your wife will keep on working at her new job for the next x years loan is for?

Common sense says that people should count on half of one persons income when it comes to liabilities (such as house and other payments). You are trying to do exactly the same thing all the fools did to get underwater into the recent crash... overborrow and than cry to your government nanny that you are too poor to afford to pay for the pile of crap you overleveraged.

2   LAO   2011 Jan 5, 9:16am  

Hey I feel for you... My wife got laid off last year when we were looking to buy... To be honest, we decided it was for the best though.. Home prices where we are looking have remained stagnant or dropped a decent amount. I worked my ass off at work and got a significant raise in the meantime... She's collecting unemployment and we've decided we don't want to buy a home based on our dual incomes. We are going to buy whatever i can qualify for... and in the meantime try to save about $100K downpayment. We learned to cut back our spending... We realized we are saving just as much now on my income alone than both of our incomes combined before. Discovered a lot of wasteful spending.. far too many dinners out primarily!

We are still in the market to buy.. Just not until we can afford 20% down... Which is pretty hefty amount in the LA Area. Where are you looking to buy? I don't see home prices increasing by any amount to stress over in the next 3 years. I'm talking a few percent increase a year at best! And definite potential for further down turns in upper middle class neighborhoods where dual earning households are being stretched too thin. Look at your wifes income as icing on the cake... A $300K loan isn't bad if you can bring $100K to the table as down payment.. You can start shopping for $400K homes then.. which depending on where your looking, can buy either a mansion or a average middle class/fixer upper.

3   RC2006   2011 Jan 5, 9:34am  

@chris

I didn't want them to double the loan that they would give me, I just wanted about 50-80k more, thought her income should count for something.

@LAR

We are also looking in LA, looking at areas from Glendora to La Crecenta.

I guess it’s all good I still have a year before my oldest starts kindergarten, my wife is the one that is the one wanting to buy now and stressing me out.

4   LAO   2011 Jan 5, 10:18am  

Rpanic,

If ur son has a year until he starts kindergarten... May i suggest moving to the school district you want to attend now and find a suitable rental. Then that would solve some of ur stress... Kid is in a good school and u can save more money in the meantime and in a year after ur lease is up you will have more saved and housing may be lower.... Or worst case scenario stagnant.

5   LAO   2011 Jan 5, 10:27am  

La Crescenta /Montrose/ La canada flintridge is a great area of LA... Also pretty damn expensive! Dont know as much about glendora. We actually would like to move into La crescenta/montrose, but realistically will probably end up in Woodland Hills or Granada Hills, unless prices of SFH's become more affordable. The few Great public school districts in the Valley demand 6 figure premiums atleast over their next door neighbors in more questionable districts.... Very frustrating!

6   American in Japan   2011 Jan 5, 10:42am  

What % were you looking to have for the down payment, 10%? Just curious...

7   B.A.C.A.H.   2011 Jan 5, 11:29am  

Actually rpanic, I think they are just getting back to "normal" underwriting standards, like before desperate changes were done in the credit markets to goose borrowing and spending. Welcome back to the pre-1990's.

8   Done!   2011 Jan 5, 11:50am  

They only count 24 or more consecutive months of uninterrupted employment from the same employer.

9   B.A.C.A.H.   2011 Jan 5, 1:07pm  

from a review on Amazon

The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke

http://www.amazon.com/Two-Income-Trap-Middle-Class-Mothers/dp/0465090826

"...The mother/daughter team of Elizabeth Warren and Amelia Warren Tyagi have written one scary book. What exactly makes this book so frightening? The fact that many of their conclusions are probably correct.
A friend who happens to be a CPA who counsels families in financial trouble told me about this book. She actually is warning her clients not to read it because it paints a fairly bleak and depressing picture. Naturally, after she told me this, I had to read it, even though she was correct, much of the information contained in it is depressing.

... Because so many families are now two income dependent they have become trapped and are more financially vulnerable than previous generations. Many families use all of the income they receive from both husband and wife, and barely get by. As a result, any interruption of the income flow can result in disaster. One telling statistic: today's two-income family earns 75% more money than its single-income counterpart of a generation ago, but actually has less discretionary income once their fixed monthly bills are paid.

... Warren and Tyagi make a compelling case that ... the culprit is in large part the ever escalating cost of housing and education in America's suburbs. As many parents chase the better schools in an attempt to assure their children the best possible education, real estate prices in areas serviced by those schools rise and with it the cost of the homes.

At one time, families could count on stay-at-home mothers as a kind of financial safety net if disaster struck. If dad lost his job or some other financial problem arose, mom could go to work either fulltime or part-time to help tide the family over until the crisis abated. But today, when so many families are dependent on two incomes, families are at a frightening risk should any financial crisis arise in the family...."

10   Mark_LA   2011 Jan 5, 1:47pm  

La Crescenta schools are among the best public schools in the country (all rated 9 or 10 at greatschools.org). They're part of the Glendale Unified School District. They're right up there with neighboring La Canada School District (which is #2 in the state).

Considering the horrendous state of public schools in California, people pay a large premium for homes in one of the good school districts.

That being said, there's not much inventory of homes under $400k there...if you find any, they're going to be beat-up former 800 square foot rental cottages.

11   bubblesitter   2011 Jan 5, 2:44pm  

From OP's experience - prices are going to go up anytime soon? Nope.

12   vain   2011 Jan 5, 2:57pm  

Mr.Fantastic says

wait until your down payment is high enough to afford to mortgage with a SINGLE income.

Which at $100k/year, is impossible.

13   Quant HF Mgr   2011 Jan 5, 3:29pm  

Better your situation than my relatives' in the Real Bay Area: reliant on two incomes, probably $120k and $70k, to pay for a $950,000, 53-year old POS they bought at the peak...because they "had to own" and "real estate always goes up." Now they are house poor and neck deep in debt - while shouldering a huge amount of risk. They got lucky before that with a condo they bought and sold quickly on the way up, so they put the profits from that -- along with money given to them by the mother in law -- into the $950k home. Oops. That almost $200k is gone. Bottom line is they owe approx $760k and will never be able to move, etc. Do you really have a good understanding how much debt $760,000 is?

14   permanent_marker   2011 Jan 5, 3:41pm  

Rpanick,
while I feel for your situation... the selfish dude in me is cheering for the 'new normal' in lending standards.

If the banks keep this up, house prices will come down substantially, as not many will qualify for a loan on a single income, for an inflated house.

we can't count on our government to keep housing affordable... may be the cautious banks can? oh my!

15   ch_tah   2011 Jan 5, 11:37pm  

That is extremely (absurdly?) conservative to wait to purchase based on 1 income. As long as you have a rainy day fund (at least 6 months of expenses), why should someone basically ignore a significant amount of purchasing power? I agree people shouldn't get in over their head, but the other extreme of ignoring your spouse's income is just overly conservative. If you live in the BA where most people are comfortable using dual incomes to afford a house, you are basically saying never buy.

16   bulletdodger   2011 Jan 6, 12:03am  

rpanic01 says

... my wife is the one that is the one wanting to buy now and stressing me out.

Hey, Suzanne researched this.

http://youtu.be/Ubsd-tWYmZw

BD

17   FortWayne   2011 Jan 6, 12:16am  

ch_tah says

That is extremely (absurdly?) conservative to wait to purchase based on 1 income. As long as you have a rainy day fund (at least 6 months of expenses), why should someone basically ignore a significant amount of purchasing power? I agree people shouldn’t get in over their head, but the other extreme of ignoring your spouse’s income is just overly conservative. If you live in the BA where most people are comfortable using dual incomes to afford a house, you are basically saying never buy.

If you just start a new job it is not guaranteed income.

Maybe you never had to loan money out to people. But I would not loan anyone any significant money if they worked in any place for less then a few years.

House loan isn't same as car loan. You are not borrowing for 5 years, you are borrowing for probably 15 (some people insanely borrow for 30 and turn into indentured servants). How does the bank know that you can keep paying it for 15 years and not default like so many did recently?

Land and housing was never as high that it needed 2 incomes, it was always affordable by just one. Lately things got screwed when investment banks found a way to build a tollbooth between people and housing. But conservatively speaking when most people only work somewhere for a few years before switching jobs in this economy, relying on 2 incomes is fiscally irresponsible.

18   FortWayne   2011 Jan 6, 12:22am  

vain says

Mr.Fantastic says

wait until your down payment is high enough to afford to mortgage with a SINGLE income.

Which at $100k/year, is impossible.

If you can't afford, you shouldn't buy.

When most people can't afford (which is the current situation) prices will have to drop.

19   Â¥   2011 Jan 6, 12:33am  

ChrisLosAngeles says

some people insanely borrow for 30 and turn into indentured servants

the good thing about 30 year term is that historically the years 16-30 are being repaid with highly diluted dollars.

$1 was worth 50c, 1980 -> 1995.
63c, 1985 -> 2000
66c, 1990 -> 2005
70c, 1995 -> 2010

hmm I see a pattern here : )

20   Hysteresis   2011 Jan 6, 3:30am  

always using two incomes to pay your mortgage is risky.

if one or even both of those incomes goes away, or decreases you better hope you have enough savings to cover your mortgage.
there could be any reasons like divorce, wife has a kid and stops working, job loss, new job pays a lot less (those $100k+/year jobs are going away quickly), sickness, injury, death.

too many reasons that one or both incomes will go away or decrease to commit to an overpriced 30 year mortgage.

requiring two incomes reduces your margin of safety. and over a 30 year period there will be periods of unplanned, unexpected hits to your income.

the only reason it's so common in the bay area/peninsula is because prices are too high.

21   ch_tah   2011 Jan 6, 3:44am  

anon says

the only reason it’s so common in the bay area/peninsula is because prices are too high.

That's one way of looking at it. The other is that prices are high because people in the BA are willing to have dual income (or more) households.

22   Â¥   2011 Jan 6, 4:51am  

ch_tah says

The other is that prices are high because people in the BA are willing to have dual income (or more) households.

Prices jumped right after banks started lending based on both incomes . . . that was the 1970s.

23   RC2006   2011 Jan 6, 5:04am  

I never wanted to get the max for double income I just thought her income should have counted a little, personally I can wait and catch a smaller knife.

24   Tude   2011 Jan 6, 8:34am  

Believe it or not there are many places in the Bay Area one could buy on one income. Well...maybe not the "REAL" Bay Area as defined by the snobs on here (that is, if the average home price isn't 800k, it's isn't really the Bay Area, no matter how close you are to SF or the Actual Bay, lol)

25   ch_tah   2011 Jan 6, 8:44am  

Tude says

Believe it or not there are many places in the Bay Area one could buy on one income. Well…maybe not the “REAL” Bay Area as defined by the snobs on here (that is, if the average home price isn’t 800k, it’s isn’t really the Bay Area, no matter how close you are to SF or the Actual Bay, lol)

Sure, as long as that one income is $200k+.

I'm pretty sure that's not what you were talking about, so why not just list these great places instead of being vague about it?

26   B.A.C.A.H.   2011 Jan 6, 10:09am  

Mr.Fantastic says

Don’t forget filthy rich “Chindians” who fly from Shanghai and want to buy 2,400 sqft homes on 3,000 sqft lots

Probably not "filthy rich" by your standards, but "wealthy enough" to buy Their American Dream in The Fortress.

27   anonymous   2011 Jan 6, 10:39am  

ch_tah says

Tude says

Believe it or not there are many places in the Bay Area one could buy on one income. Well…maybe not the “REAL” Bay Area as defined by the snobs on here (that is, if the average home price isn’t 800k, it’s isn’t really the Bay Area, no matter how close you are to SF or the Actual Bay, lol)

Sure, as long as that one income is $200k+.
I’m pretty sure that’s not what you were talking about, so why not just list these great places instead of being vague about it?

Almost anything midsized in Hercules, say.

28   ch_tah   2011 Jan 6, 11:18pm  

oddhack says

ch_tah says

Tude says

Believe it or not there are many places in the Bay Area one could buy on one income. Well…maybe not the “REAL” Bay Area as defined by the snobs on here (that is, if the average home price isn’t 800k, it’s isn’t really the Bay Area, no matter how close you are to SF or the Actual Bay, lol)

Sure, as long as that one income is $200k+.

I’m pretty sure that’s not what you were talking about, so why not just list these great places instead of being vague about it?

Almost anything midsized in Hercules, say.

Which Bay are we talking about? San Pablo Bay? I thought we were talking about SF Bay.
I'm sure Hercules is a great area, but it doesn't seem practical for those working in the South Bay or the Peninsula.

29   ch_tah   2011 Jan 7, 1:50am  

Mr.Fantastic says

It doesn’t surprise the only person advocating “two income” mortgages on this board is ch_tah.

Other non-surprises:
1. Mr. Fantastic adds nothing to the conversation.
2. A board full of bears looking for every possible excuse not to buy would argue that you should never use a second person's income to get a mortgage.
3. The list of many nice places to buy in the BA with one income consists entirely of one town that may be a good commuter town to SF but is completely useless to people who work in the South Bay and Peninsula.

30   ch_tah   2011 Jan 7, 2:20am  

Mr.Fantastic says

ch_tah basically just exposed himself as an over leveraged home owner who is trying his best to use Patrick.net as a personal arena for his home owning regret & catharsis. Thank you ch_tah, your tears are like sweet, sweet sugar.

I have no desire to help you hijack another thread with your petty attacks. If you have information that refutes my statements, provide it. Other than that, feel free to believe whatever you want about me in spite of it not being true.

31   Hysteresis   2011 Jan 7, 2:33am  

ch_tah says

Other non-surprises:
2. A board full of bears looking for every possible excuse not to buy

no need for excuses.

we're just smart enough to wait for prices to fall.

http://www.housingtracker.net/asking-prices/san-jose-california/
Dec 2010 6,930 $298,225 $438,738 $649,125
Dec 2009 5,056 $332,500 $493,350 $770,972
Dec 2008 8,012 $345,461 $504,905 $767,535
Dec 2007 7,512 $501,390 $619,747 $782,200
Dec 2006 4,733 $579,724 $695,375 $913,944

32   ch_tah   2011 Jan 7, 3:03am  

anon says

ch_tah says

Mr.Fantastic says

It doesn’t surprise the only person advocating “two income” mortgages on this board is ch_tah.

Other non-surprises:
2. A board full of bears looking for every possible excuse not to buy

no need for excuses.
we’re just smart enough to wait for prices to fall.
http://www.housingtracker.net/asking-prices/san-jose-california/

Dec 2010 6,930 $298,225 $438,738 $649,125

Dec 2009 5,056 $332,500 $493,350 $770,972

Dec 2008 8,012 $345,461 $504,905 $767,535

Dec 2007 7,512 $501,390 $619,747 $782,200

Dec 2006 4,733 $579,724 $695,375 $913,944

Since you've been shown to provide false data, I'm skeptical of your website. Your data is for all of SJ. Let's assume the 75th % represents Almaden Valley pretty well. According to that site, the 75th percentile was $1.1M in 2006. Now it is $625k. Can you show me one house in Almaden Valley that actually had a similar drop to what those numbers are showing?

33   Hysteresis   2011 Jan 7, 3:14am  

ch_tah,

i agree with mr fantastic.
you're one of the dumbest guys on this board.

everytime i reply to one of your posts, i greatly regret it.
i hope i've learned my lesson.

34   ch_tah   2011 Jan 7, 4:50am  

Any time you guys are challenged, you resort to name calling without defending your position. Nice.

It's been almost a full day, and we're still only up to one city (which is probably debatable) to support Tude's claim that there are "many" nice areas where you can buy with one income.

35   EBGuy   2011 Jan 7, 5:50am  

Almost anything midsized in Hercules, say.
Wow, I hadn't checked out that neighborhood in a while. Short sales are running 50% off the previous sale price (circa 2006). Currently 65 homes for sale; pent up supply (NODS, NOTS, bank owned) stands at 405 homes. Getting more affordable every day. Standard disclosures about noise in the data; information deemed reliable but not guaranteed.

36   LAO   2011 Jan 7, 6:19am  

ch_tah says

Any time you guys are challenged, you resort to name calling without defending your position. Nice.

It’s been almost a full day, and we’re still only up to one city (which is probably debatable) to support Tude’s claim that there are “many” nice areas where you can buy with one income.

I think a lot of people are taking the stance that the absurd prices in the Bay Area, while feasible for 2 high paid lawyers or doctor couples.

If you went door to door and did a census of the neighborhoods that are over-priced... You don't see two professional neuro-surgeons co-habitating THAT often. In a lot of the areas you see A) A successful man supporting a stay at home wife... or B) A successful man on the brink of a divorce from his/ equally successful wife... soon to marry a trophy wife... (with zero income).

Your dual income highly successful happily married couples aren't as prevalent as you believe! The census will tell you that!

37   ch_tah   2011 Jan 7, 6:49am  

Los Angeles Renter says

ch_tah says

Any time you guys are challenged, you resort to name calling without defending your position. Nice.
It’s been almost a full day, and we’re still only up to one city (which is probably debatable) to support Tude’s claim that there are “many” nice areas where you can buy with one income.

I think a lot of people are taking the stance that the absurd prices in the Bay Area, while feasible for 2 high paid lawyers or doctor couples.
If you went door to door and did a census of the neighborhoods that are over-priced… You don’t see two professional neuro-surgeons co-habitating THAT often. In a lot of the areas you see A) A successful man supporting a stay at home wife… or B) A successful man on the brink of a divorce from his/ equally successful wife… soon to marry a trophy wife… (with zero income).
Your dual income highly successful happily married couples aren’t as prevalent as you believe! The census will tell you that!

Ok, well Tude said "many" places, so I figure he or someone could back that up by naming more than one.

The census data does show that many of the better areas of the BA have significant numbers of households making $200k+ whether that be one income or dual incomes.

38   ch_tah   2011 Jan 7, 7:17am  

Mr.Fantastic says

And by significant, ch_tah means “That claim means nothing because I didn’t actually have any credible statistics to back that statement up.”

See unlike you, I can actually support my argument when questioned. I don't have to resort to name calling.

http://projects.nytimes.com/census/2010/explorer?hp
Check out Los Altos, MV, PA, etc.
30%-50% above $200k

39   bighorse   2011 Jan 7, 7:35am  

Los Angeles Renter says

f you went door to door and did a census of the neighborhoods that are over-priced… You don’t see two professional neuro-surgeons co-habitating THAT often. In a lot of the areas you see A) A successful man supporting a stay at home wife… or B) A successful man on the brink of a divorce from his/ equally successful wife… soon to marry a trophy wife… (with zero income).

You nailed it right there!!

40   LAO   2011 Jan 7, 7:57am  

ch_tah says

See unlike you, I can actually support my argument when questioned. I don’t have to resort to name calling.

http://projects.nytimes.com/census/2010/explorer?hp
Check out Los Altos, MV, PA, etc.
30%-50% above $200k

So that means the other 30-70% can't afford to buy a home in the area... It only takes a few leaks to take down a sinking ship.

But thanks for the census info... it's eye opening to see how many households over extend themselves....

Comments 1 - 40 of 73       Last »     Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions