How far is too far?

"Stupidru" (Schm1an) 04/08/2014 at 09:28 • Filed to: None

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So my wife and I are anticipating closing on our house in the next two weeks. The bank finally came back yesterday and wanted to know about a $963 transaction from Paypal into my bank account. I told them I had sold a set of wheels and tires, and they wanted me to prove it. So I dug up PayPal transaction statements, screenshots of my ad for the wheels, and screenshots of my PMs with the buyer. I'm only doing this because I've given up all self respect. We're so close to getting the house and I'll literally do almost anything just to prevent any more delays.

So how far is too far to let a bank dig into your personal space?

RacecaR > Stupidru 04/08/2014 at 09:32

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We went and got pre approved for our next house on Friday. The woman at the credit union told us not to do anything large with the accounts she used to verify we have money with. Large transactions will need to be verified and it could slow things down.

In the time up to closing, they are just keeping an eye on your accounts since you are borrowing their money. It is mostly a case of CYA for them. Once you close, they more than likely will not be monitoring you so closely.

CalzoneGolem > Stupidru 04/08/2014 at 09:32

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That's weird man.

KMarino > Stupidru 04/08/2014 at 09:34

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They just want to make sure your money is legit. I avoided making any large cash deposits or withdrawals before purchasing our house to avoid this.

Sn210 > Stupidru 04/08/2014 at 09:39

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it sucks but you've got to do it. My bank wanted me to write an employment history letter explaining that I had been working full time over the last five years, just with different employers.

Party-vi > Stupidru 04/08/2014 at 09:40

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The bank is covering their ass against you using any ill-gotten money to purchase your new home. My dad did a favor for my sis and BIL and purchased a 2ct diamond off of them in cash to give them some extra spending money while their house was being built and my dumb brother-in-law deposited it in the bank and they went ape shit - asking for a receipt, who he got the money from, what day, etc.

Try to avoid making any large purchases until everything is signed and you're in the new house. It's worked so far for me.

fink stinger > Stupidru 04/08/2014 at 09:42

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The whole industry is insane. We have always come to the table with exceptional credit, income and debt ratios but it still seems they like to pilfer through our business with a fine tooth comb just for the fun of it. They always try to make you feel like you are right on the edge of getting the loan and that they are taking a big chance on you. I always wonder about all of those subprime mortgages that were sold to people that were borrowing well past what was prudent and how those credit reviews went.

EDIT: I forgot to mention that I like to transfer $10k around all the time just for the hell of it. Those all show up and always get asked about. I just say "I watch the interest rates like a hawk and transfer money to the accounts that offer the best rate". Not really true, but it sounds good to me. Certainly makes it a topic of discussion.

Good luck on the new home.

MontegoMan562 is a Capri RS Owner > Stupidru 04/08/2014 at 09:45

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Seems pretty normal to me.

A random spike of anything over 500 they have to check. If you were given money of 500+ from someone you actually need to file a "gift letter" with the bank so that their ass is covered.

For example my grandparents helped my wife and I with a small gift when we bought our house. They gave us $2,000. OK it was a really generous large gift!

So I had to turn in a signed letter from them saying they gave me the money towards the house.

EDIT: Partially unrelated....what wheels are those?

jariten1781 > Stupidru 04/08/2014 at 09:54

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Cash transactions will do that...no biggie.

chuck07 > fink stinger 04/08/2014 at 09:56

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I was originally approved for a house that was supposed to settle this month. That fell through and we are buying another house that will hopefully settle in the third week of May. In the mean time I have spent $10500 on a car, $4000 on work related travel expenses and $4700 on prepaying for the honeymoon. I have received a bunch of checks for those travel expenses and I should be getting 5-6 thousand for selling my car soon.

We are buying a house for less than half of what we 'qualify' for, so I hadn't thought about it too much. I hope it doesn't burn us.

crowmolly > Stupidru 04/08/2014 at 10:00

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Considering the dumpster fire that has been the housing market and lending as of the past number of years I'm not surprised. They need to ferret out any possible "stunts" that people still try to pull, either for their own safety or because the government is making them do so.

OPPOsaurus WRX > Stupidru 04/08/2014 at 10:08

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It will never end. We refinanced last year and they started doing the same crap. They also had the house appraised. I was in the middle of a couple renovations and they tried to refuse refinancing because the house was in an 'unsellable' condition. I'm not selling it buddy!!!! if you wanna have an issue with it, try it when I go to sell it. The unsellable condition was a missing ceiling in the bathroom which I could understand but they also got upset about outside porches having exposed ceiling joists. The finance industry can go suck a tailpipe.

Bad Idea Hat > Stupidru 04/08/2014 at 10:09

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We had a fairly easy time with our house, except for two problems; my wife was married briefly, and had been divorced for about 4 years before we got the house. Apparently that's a problem, and she had to trudge out all of her documents stating that her ex-husband would have no legal claim to the house. After being divorced for 4 years. Her ex-husband. Her and I had been married 4 months. She had been divorced for 4 years. Why?!

The second problem was during closing, they gave us the spiel of not making any major transactions. Okay, fair enough, there's not a whole lot of things to spend your money on when you're sans liquid assets due to purchasing a house anyways. Well, we went grocery shopping a week after our offer was accepted and had begun closing. It wasn't a huge trip, maybe $100, and it was planned to last us for well over a week due to a serious lack of free time because of moving-related activities. Apparently that was enough to trigger a call from the closing agent. It wasn't anything major, just wanted to make sure it was a reasonable expense and not indicative of any cash issues we were having.

We did buy in 2011, about midway down the long fall the market made. It made sense then and now why they went crazy about closing. It still sucks, though.

avens > Stupidru 04/08/2014 at 10:15

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When dealing with banks there's one key thing you have to understand: in practice there's no such a thing as personal privacy or as bank secrecy. They know everything about you and to know more.

Louros > Stupidru 04/08/2014 at 10:19

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I'm impressed you were able to get nearly a grand for a set of stock WRX wheels

SPNKiX > Stupidru 04/08/2014 at 10:19

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this happened to a buyer of our house a long time ago. it caused the sale to fall through. They actually consolidated a few credit cards! So dumb. Totally freaked the bank out.

Best advice is don't move money around while buying a new house, ever.

Mustafaluigi > MontegoMan562 is a Capri RS Owner 04/08/2014 at 10:26

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2011-2014 WRX

Stupidru > Louros 04/08/2014 at 10:32

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Well the wheels weren't the big seller- the big seller was the tires. 245/40/17 Pilot Super Sports

Stupidru > avens 04/08/2014 at 10:33

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I'm wholly prepared to sign a letter and describe my bathroom breaks and what consistency my poo is at

Stupidru > KMarino 04/08/2014 at 10:36

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I get it. I mean I would do the same in their situation, but at the time we weren't planning on buying. We just happened to look on the real estate website during lunch one day, saw the house, toured it, loved it, decided we couldn't do any better, and put an offer in. If I would've known the shit storm that would've popped up, I would've rather done it at a bank, had him sign a bill of sale, then make him wait at my bank until the check cleared.

Stupidru > OPPOsaurus WRX 04/08/2014 at 10:38

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Somewhat related, we put an offer on the house and the sellers rejected our offer saying "FHA will never approve the roof. Give us an extra $2500 on the offer and we'll spend $10k to get the roof torn down and rebuilt!" We never brought it up as a point of discussion, they simply just offered it to us

Stupidru > Bad Idea Hat 04/08/2014 at 10:40

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When we went to go buy, we didn't have full-time jobs for the past 5 years since we graduated 3 years ago, so we had to go and dig up our transcripts and write a letter describing our "situation"

Stupidru > Party-vi 04/08/2014 at 10:43

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My uncle (we're so close in age, he's basically my brother) just bought a house and his bank wouldn't let him spend a dime for about 5 weeks. He had to sign off that he had received a cash loan from his dad to make his expenses last until closing. So weird.

Stupidru > MontegoMan562 is a Capri RS Owner 04/08/2014 at 10:44

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Walfisch > Stupidru 04/08/2014 at 10:51

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Yeah don't worry about this, it's pretty standard. I also recently bought a home, and my father loaned me some cash to help with the downpayment, so I had to submit a gift letter stating this. Just keep on giving any paperwork that they ask, as long as it's within reason. Eventually, you guys will close, and things will finally settle down.

Stupidru > Walfisch 04/08/2014 at 11:16

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I understand they have to ask, but the thing that irked me is that we've been at this for about a month and then finally they say "oh hey, remember this? Yeah we want more info on that" when we're about 10 days from closing.

Textured Soy Protein > Stupidru 04/08/2014 at 13:20

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Yet another reason why I'm in no particular rush to buy a house.

Equity schmequity. I'll invest the money I didn't spend on the house.

Stupidru > Textured Soy Protein 04/08/2014 at 13:41

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Well, we see this house as a bit of an investment. I know it's not as good as it used to be, but the house we're buying is easily worth another $20k. In fact, the seller's realtor said she wanted to list it for $20k more... Plus, the location is about 2 blocks from our downtown area that always has summer festivals and the neighborhood is really starting to turn around with younger people buying up the houses and updating them. We think this house will easily be worth an extra $75k in 10 years

deadpedal > Stupidru 04/08/2014 at 13:49

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Seems silly, but they need to know all income and assets are legit.

Also, they aren't the one asking you for money...they kinda can do what they want.

Textured Soy Protein > Stupidru 04/08/2014 at 14:22

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I'm sure for many people, a house is a good investment. I guess I never really got caught up in the hype, because there's plenty of other ways to invest, and I didn't want to be tied to a house. Because:

1. I messed up my credit pretty badly when I was in college. Everything has long since been paid off and kept current. But my credit rating only recovered about a year ago. No way was I going to even think about taking out a mortgage with less-than-stellar credit.

2. Even with perfect credit, a mortgage would still be a lot more expensive than renting.

3. I never really saw myself staying forever in the city where I live. I didn't want to buy a place and then be stuck with it when I inevitably decided to leave town.

Stupidru > Textured Soy Protein 04/08/2014 at 14:32

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No matter what anybody tries to tell you, a house is never cheaper than a comparably-furnished apartment. There's just no way, but if you want privacy and a feeling that you will actually own something someday, then a house is for you. I also like doing little projects, so I also view a house as something to do and something new to learn about. I get to personalize it and don't have to ask anybody if I can repaint my walls or if I can grill on my patio. Plus now I can have my buddies over and crank up the volume for the big game.

It's all a big give-and-take. Give a little more money, take back your freedom.

Textured Soy Protein > Stupidru 04/08/2014 at 16:20

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Nobody's trying to tell me anything except you. ;)

This is my own opinion of why, for my situation, I prefer renting. I'm not trying to make any sort of blanket statement that buying a place to live is inherently worse than renting. Just that renting is better for me.

But back to my original reasons:

1. Credit. When my credit score was in the 600s, that would've made mortgage payments significantly higher. I've never had a landlord try to charge more rent because of a credit score. There was zero reason to rush into taking out a 30 year mortgage with interest rates determined by that crap credit score, when I knew my credit rating would eventually go back up to a good level. It's 735 now.

2. A house is more expensive than renting an apartment. You talk about comparable bought/rented properties. But if I were buying, I wouldn't buy a comparable property to one I rent. While I'm happy to rent my large-for-1-bedroom apartment with a garage, pool and gym, if I were buying I would not be looking for a large-for-1-bedroom condo with a garage, pool and gym. I would look for something that offers more, i.e. a house. Which would be more expensive.

3. Flexibility. I live in Madison, WI. I came here for college, stopped going to college for a while because of fighting with my parents over money, and stuck around to work with the intention of going back to school and paying in-state tuition. But there was never going to be much reason for me to stick around after I graduated. I didn't want to buy a place that I had no guarantee of being able to sell in a timely fashion, if and when I got a job somewhere else. I graduated last May, got a job in Madison that looks great on my resume, and actually tomorrow I'm going to a final interview in Chicago for a way-fancier job that I'm in the running for precisely because of my current job. Let's say I get that Chicago job. If I break my lease, I'm out a couple grand. If I owned a house, I would then be stuck paying for rent or a mortgage in Chicago while also paying for the house in Madison until it sells.

Again, everyone's situation is different. For me, buying just didn't make sense.

Now I will go back to the blanket statement I made earlier: while a house is a possibly good investment, the money saved on living in a good-enough rental property (i.e. in my reason #2) can then be invested in other ways that are more liquid and offer just as much return on investment as buying a house.

There's this perception out there that renting is "throwing away money," while buying a house "you actually own something." Except when you buy a house, you're taking out a gigantic loan with massive amounts of interest to pay back. You know what I call paying interest? Throwing away money.

Yes, a house is an asset that has a good chance of appreciating in value, but in order for it to be a net gain you need to make enough money to first cover all the interest you're paying on that loan.

Whereas if I take the thousands of real, not-borrowed dollars I get to hang on to by not buying a house, and instead throw it in a quick-n-dirty index ETF, any value that money gains is mine (after taxes) rather than eaten up by paying off interest.

Going back to my situation, since I've already explained in two different ways the factors outside of possible return on investment that make renting more desirable to me. And since I invest my money in other ways, I'm still earning money, without having to worry about the negatives (in my situation) of owning a house.

Stupidru > Textured Soy Protein 04/08/2014 at 16:27

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Sorry, I didn't mean to create a rouse! I understand your reasons for wanting to rent- I was merely explaining the other side of the fence. I've rented for 7 years and just wanted something different.

If you're ever north of Milwaukee let me know and we'll get a beer or something