Fishermen, like most people, need to borrow money to buy houses. But unlike the general population, they also need to borrow to buy fishing gear, trucks and fishing boats. Those fishermen who work hard at what they do make a good living, but almost all are self-employed and don’t bring home the weekly paycheck that’s so important in obtaining a loan.
Fortunately, banks or their branches situated in or near fishing villages generally understand the problems faced by clients without so-called “stated income.” So do many mortgage companies. One of these is Matchmaker Mortgage in Damariscotta. “We do mortgage loans for fishermen and lobstermen with no stated income,” said Matchmaker’s owner, James Ferrier, who says he works with many lending institutions to get the right loans, the best deals for his clients.
Of course, the applicant’s income needs to be documented. But in some cases, depending on the size of the loan and the percentage of the value of the house, Matchmaker can make the loan without income verification. But that comes with a price. “The higher the risk,” Ferrier said, “the higher the interest rate.”
Take for example a fisherman who wants to buy a $100,000 boat. He has a house worth $200,000 on which he has a $50,000 mortgage. Using the house as collateral, Ferrier said his firm could finance a $150,000 mortgage. Out of that $150,000, the fisherman would pay off his $50,000 mortgage and use the balance of the mortgage to buy the $100,000 boat. Without income verification, the fisherman would probably pay approximately 7 percent interest on a fixed-rate loan. If he has fully documented income, the percentage rate would probably drop to between 6 1/4 and 6 1/2.
Ferrier noted, though, that many people choose an adjustable rate mortgage because the interest rate is so much lower. In the case of the hypothetical fisherman, at current rates it would probably drop to between 3-7/8 and 4 percent.
An important part of any loan process is the applicant’s credit score. An inability to make timely payments on an existing mortgage or credit cards affects the score. Unfortunately, if an applicant works through a credit counselor to pay delinquent bills, loaning institutions consider that a black mark, that he or she is not capable of paying bills.
In such cases, Ferrier and his agents can usually obtain a mortgage if the applicant is able to show a certain debt-to-income ratio. Matchmaker does a lot of debt counseling, debt consolidation and mortgage refinancing.
Susan Symington, who joined Matchmaker last year after 20 years in the real estate business, explained mortgage refinancing and home purchases in addition to debt consolidation to lower monthly payments. She used a hypothetical borrower she called Capt. X, who owned a $200,000 house on which he had a mortgage of about $75,000. Capt. X had car payments and other debts totaling about $20,000. Matchmaker took the $75,000 and the $20,000, which equaled $$95,000, and refinanced the mortgage using the equity of the home, $105,000, as collateral.
“We go through the process,” she explained. “[Applicants] state what their income is. They don’t have to prove their income. That’s the beauty of this method of financing; it’s really based on their credit history. If they have credit cards and a car, they have to reveal their credit history. We do that here. We pull their credit report.”
If an applicant shows poor bill-paying ability, then, Symington said, “It’s not impossible, it’s definitely possible, but we need to talk.”
Depending on the all-important credit history and debt-to-income ratio, “we can help,” said Ferrier. “We can do a lot of things. We can get them mortgage money.”
For more information call Matchmaker Mortgage at (207) 563-3232, Susan Symington’s cell phone, 380-4300, or e-mail the office at mmeinc@midcoast.com.