Home Mortgage - Job Offer Letter?
 

Quick question, do you get a letter or anything stating that "you're officially hired with expected pay of ____". We got the CJO earlier this week, completed drug test and background check just waiting on indoc date. Trying to buy a house and mortgage company wants an official letter with that information, tried giving them the CJO letter and they weren't happy with that. From talking to other guys that have gone through recently they don't remember anything to that effect. Has anyone else had to deal with this?

I’d be surprised if any company would write based on a CJO.

Classes could get delayed, stuff could change.

A CJO wouldn’t seem to be equivalent to income verification.

Maybe they do have a process for something like that used for commission only sales folks, but even with those guys I would think they would want to see a pretty long income history.

We got a job offer letter, but there was no statement of expected income.

I’d rent for a while.

Be prepared to fill out lots of paperwork! I bought my house around 2013 and the income verification is very extensive. They pull up all kinds of info on you (cc history, bank balances, kid you beat up at school etc.)

To answer your question, your CJO won't do. If you find a (shady) place that takes your CJO it will get shot down by the underwriters. Lots of places got burned in 2008.

Rent if you have to.

Pretty sure you’ll have to use your income from your current job. They aren’t going to look at potential future income.

Call Dave Devine at NBKC (Kansas City KS), or Marty Medve at Trident Home Loans (Gulf Breeze FL).. They both understand airline pilot income and can help navigate they loan process.

I also used NBKC, Bernie Kalmus. I did all that paperwork in mid Jan this year. NBKC was pretty damned good.

Awesome, I'll check in with those guys if this falls apart with the current place. We already signed a contract and had a "prequal" or whatever didn't think it'd be an issue. I told my reserve unit I was going to be PT since they had to know what to do with man-days prior to the FY closing out and I don't want to delay any potential start date at AA. Did drug test/background on Tuesday, background check says it's done and the drug test lady said 48 hours so hopefully we'll get a date soon.

Isn't a CJO a conditional offer? How can you do income verification on something that is conditional?

Remember, the underwriters may not distinguish between a CJO from American (pretty dang likely you'll be getting a class date given their level of retirements and overall size) and a much smaller airline (who knows what can happen if economy bumps etc).

Keep us posted if you successfully get underwritten with just a CJO with a conforming or jumbo.

Will do. I didn't really expect them to take the CJO but I figured if I could show them a start date that would make them happy. We could pay cash for it so that may be what ends up happening at this rate. I just didn't want to have that much cash tied up right now.

Pay cash now... cash out refi later once income has stabilized or, or Max out the 401k and the IRAs as soon as possible with the savings from the lack of mortgage payments.

Well done! Just pay cash and be done with it, way better not having a payment and if the economy tanks and furloughs happen, pretty nice owning your home.

We own the house we are in now, my plan was to pay off the new one when this one sold anyway, just don't want to be sitting on two houses with very little margin until the new job is settled in. We are maxing out retirement already and have money going to kids school too. I'm actually hoping to be cash heavy when the economy dips again and gobble up some rent properties.

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Yes.

Pay cash.

The interest on a mortgage is insidious.

Most people just look at the monthly payment, but over the course of a mortgage, you pay for a house at least twice.

I like the idea of putting the money you would have spent into retirement accounts also.

Pay yourself in terms of tax advantaged savings and let it grow. And no matter what-don’t touch it until you actually retire.

Additionally, make extra principle payments every month if your mortgage doesn’t have a pre payment penalty clause. That'll save you tens of thousands over a 30 year mortgage period.

mortgage 3.2%
investments 15-18%

Here it goes...lol

There are valid arguments on both sides of this debate, it really comes down to ORM. Our risk acceptance level is much lower, the only reason we are considering a mortgage on this house is to get wife and kids moved and expecting our current place may sit for as long as a year on the market. Once it sells we will pay off the other house. We *could* pay cash now for this one too but that leaves us with very little margin, $400k+ tied up in houses and most likely two months until I start indoc. No room for hiccups. We are willing to eat the $3k and some interest until we pay it off to avoid being that close to the line on our available cash. We aren't willing to play the market gap long term. Just not for us.

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I’d also be VERY selective right now.

Many markets are way overheated.

The real estate market will likely collapse (or at least aggressively correct) over the next couple of years. Don’t want to be 100 k upside down on something you can’t sell if life happens.

No matter how you choose to work things, definitely have enough of a down payment to avoid PMI (private mortgage insurance.) That is “insurance” which covers only the bank and which you pay 100% yet benefit from in no way. It’s throwing money in a pile and burning it.

PMI should be illegal. It’s like paying a royalty to the guy who stole your TV-just to watch him stick it in his car.

Definitely-Most Definitely do get title insurance. It is ultra cheap-and will save your ass if someone makes a clerical error somewhere along the title trail.

Save? No. It will cost you. But peace of mind has a price, too.

Additional principle payments reduce your total interest over the life span of the loan.

I think his point was you're losing out on the opportunity to invest that money and the trade off for interest savings is lower in the long run. Like I said before this has been a debate forever. We are Dave Ramsey types (I even teach classes!) so we tend toward the lower risk end of the spectrum but there are arguments on either side.

There's a pretty good podcast, ChooseFI, that does some good dialog on both sides of this argument as well (Episode 35). One place I'm opening my aperture a bit is on holding all our efund in cash and instead considering putting some of it in low risk investments (Episode 66/66R).

Another episode that really tackles the question of a paid off mortgage is Ep 68. Specifically in the Dave Ramsey lens. For us I think our plan will always be to have our primary residence paid off and stay away from a lifestyle revolving around debt. Seems weird given that my initial question here is about a mortgage, but like I said our plan is to have that for less than a year and to keep enough capital around we could pay it off immediately if we needed to start reducing exposure.

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I know you are all into the DR thing but keep in mind his advice is geared towards those who don't have self control. They will spend spend spend on any available credit card. He literally is talking to the very basic minded people that make up a good portion of the population. People who make average or below average incomes and buy new cars while living in a trailer, for example. Is that you? Or do you have a more complex grasp of finances?

In 2016 I took $360k slated for a home purchase and put it into the market, current value $780k. Interest during that time period might have been what, $20k? (Edit: I have now screwed myself by publicly posting gains!)

It's not really a debate, the numbers are the numbers, you will on average come out much further ahead by putting your money to work for you instead of it sitting idle in a home. Now that doesn't mean go out and buy some extravagant home with a jumbo mortgage, either, but it doesn't sound like you are.