We all dream of winning the lottery, retiring at a young age, and having more money than we know what to do with.
But believe it or not, some wealthy people are having problems buying second homes and refinancing their current loans.
Who would have thought?
First, even wealthy people make late payments on their loans, many of which are over $1 million. This raises a red flag immediately.
Second, jumbo loans are too large to be backed by the federal government so to lower their risk, lenders often require 50 – 60% down payment, which is upwards of $600,000 cash on a $1 million loan.
Third, buying a second home poses a risk for lenders as well because secondary home mortgages can be reduced in bankruptcy court. One homeowner was denied a loan on a secondary home because he couldn’t commit to living there 75% of the time.
And sometimes the wealthy just don’t have a good understanding of their own finances. Not long ago Nicholas Cage lost multiple homes to foreclosure because his business manager didn’t manage his money well.
To read the full story, click here.
Okay reibrain and all the rest of you who are making this real estate stuff work. We’re not and I could use some help. We retired back in 2001 and 2003. Not because we wanted to, but that’s the way it went. After a couple of underpaying fun but expensive to keep jobs, we decided to just be retired, let our 401K’s get us through a few years til Soc. Sec and Medicare. In 2005 we sold our big house, cleared over a 100K on that and then in 30 days Oct/Nov closed on a $169K fixer upper and a $199K duplex to live in and rent to a friend. We invested our $100K and then some. The day we put the fixer upper on the market the market plunged and we still have it 3 years later. Then in 2008 we found the dream house we wanted all our lives 6.5 acres in the Eastern Oregon Mts. plus a great 70’s swiss chalet ski house for 155K. We ended up buying it with a conglomerate mortgage that left the fixerupper with 2 loans that equal more than we can rent it for, but we are renting it anyway because we are underwater; the duplex is rented; the 401k is essentially gone.. but not quite; and there is a small mortgage on the mountain place. Our taxes are outrageous. We can’t see how having houses helps us out at all. And the rented fixer upper is eating us up. I’m discouraged and sad. We still have a bit of money: We’re current on our bills: but every month eats more of our reserves. Not much luck finding jobs. Cheer me up and tell me how to make this work in Portland Oregon. It seems like there is some kind of promise here and I just can’t see it,.