Your Countrywide banker: he understands!
Way back on April, 24, 2012, I questioned how you could afford to buy a new house on 11 Indian Pass Road (in a private sale) for $1.245 million and take on a $998,000 mortgage from Luxury Mortgage, while still owing $500,000 on your unsold condominium at 78 River Road. You never answered.
Since then, your River Road condo, which you purchased for $800,000 in 2005, was sold (July 13, 2012), for $805,000. This presumably paid off the $507,785 mortgage on the place, but still left you with that million-dollar mortgage on the new one. I’m puzzled.
Your salary is $126,400, or $10,500 per month. Assuming a combined state and federal tax rate of 30%, that nets out to $7,350 per month, out of which you must pay the mortgage ($4,481, at 3.5%) and taxes ($706.50), which in turn leaves $2,162.50 to pay the insurance, utilities, maintenance on the house, and feed and clothe your family. What a financial wizard you must be, to accomplish all that – if only you would do the same thing for our town!
That salary of $126,400 means, according to this calculator, that you can afford no more than a $464,000 home*. Who at Luxury Mortgage approved you for a $1 million loan at all, let alone a mortgage in that amount when you still owed $500,000 on the condominium? Name, please?
Was there a guarantor on your note? Do you have other assets to secure what is, in effect, a no-doc loan? Did your friends in town pitch in to help out? Which friends?
Inquiring minds want to know.
Christopher C. Fountain
UPDATE: Someone who’s seen the terms of the loan says it’s a conventional mortgage, not interest-only, mthly payment around $5,000. Plus, of course, taxes and insurance etc.