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A $3300 payment on $100k in income? Sounds outlandish and risky to me. I think a mortgage payment and taxes should be able to be paid with one net paycheck, leaving 3 paychecks a month for other expenses and savings. If the mortgage payment is 40% of gross pay, that's just crazy. These people will be eating lots of mac and cheese and be house poor. I hope the love their house because they won't have much money to do much else and God forbid a major repair, illness or job loss occurs. That's my 2 cents.
I agree with you. We make 100K on 2 incomes and have 2700/mo payment. Doesn't leave a lot to do anything but eat and pay the bills. I mean, we do some, but once the kids get clothes and pay for school stuff - extracurriculars...there's no vacations or trips to Great Adventure. Now that the market is crumbling - we don't even know if we'll be able to sell our house for what its worth (we just purchased it 2 years ago) and move on.
i guess the last 15-20yrs or whenever they started the Automated Underwriting system.
Edit* Actually it's always been like that is correct.
You never had a credit score back then....they will normally lend against what you had in the bank.
The more assets you had the easier it is to obtain a loan.
Credit scores I guess was used in the 70's...which made it easier for those who didnt have money to obtain a loan.
The point...if you have money like Donald Trump...you can bankrupt 2-3 casinos...and still get a good loan
Quote:
Originally Posted by Humanoid
Not it hasn't always been like that, the mortgage has changed dramatically over the years.
How common is it for a loan like this to be approved these days?
$100k salary per year. (2 jobs, one person. 1st job: 80k/yr. 2nd job: 20k a year)
House price $465,000 with $47,000 downpayment.
Projected monthly payment @ 6.6% interest on first loan, 7. something (can't remember exact)% on second loan (w.taxes @ 8k a year plus insurance): $3300 total
$15 k in credit card debt, no savings but applicant will be able to pay off credit card debt with (small) proceeds from sale of last home.
No other debts (no car payment, etc), high cost of living area
Good credit history (not sure of number, but definitely in the 700's; always on time with payment etc.
The mortgage payment alone is 40% of the gross monthly salary, am I right there, or am I figuring it out wrong?
Thanks in advance for your help. I am just trying to understand why mortgage brokers were ever able to go so high with the debt to income ratio. This isn't even a sub- prime loan, or a high interest rate loan!
Also, why isn't anyone talking about the "normal" loan situations like above that got people in trouble, due to the lax limitations over the past few years? A few slips (loss of 2nd job, need to buy new car etc.) and you're sunk. Don't they consider that when approving these things?
Thanks again for your help.
They very well may approve it... My builder's lender approves for up to 50% of gross income, at least according to their online calculator. The question is "do you wanna take it?" They're always willing to give you enough rope to hang yourself. And why not... they'll get about 50K + a house... not a bad deal! Aren't there less expensive houses in your area? That's a huge gamble based on one person working! Are you planning on working 2 jobs all your life?! How long before you get exhausted, sick, and/or get a divorce...! I know I'm being harsh, but sometimes tough love is needed.
They very well may approve it... My builder's lender approves for up to 50% of gross income, at least according to their online calculator. The question is "do you wanna take it?" They're always willing to give you enough rope to hang yourself. And why not... they'll get about 50K + a house... not a bad deal! Aren't there less expensive houses in your area? That's a huge gamble based on one person working! Are you planning on working 2 jobs all your life?! How long before you get exhausted, sick, and/or get a divorce...! I know I'm being harsh, but sometimes tough love is needed.
Contrary to popular beleif the lender would probalby still lose money with the $50k + the house if they had to go through full foreclosure proceedings.
Contrary to popular beleif the lender would probalby still lose money with the $50k + the house if they had to go through full foreclosure proceedings.
You may very well be correct in many cases, but then I'd like to know the reason they approve people for a lot more than what they can comfortably afford.
You may very well be correct in many cases, but then I'd like to know the reason they approve people for a lot more than what they can comfortably afford.
Then all these foreclosures shouldn't surprise anybody. As a saying goes - there's a fib, a lie, a bigger lie, a gross lie, and statistics. I can only hope there are no statisticians around at least... Bending to dodge the bullets.
Unless people have good financial sense and discipline, they obviously can't depend on the lenders to prevent them from destroying their lives. Yes, some buyers are greedy, but some are just uneducated in the matter and presume the lender is not there to provide them with a trap.
Unless people have good financial sense and discipline, they obviously can't depend on the lenders to prevent them from destroying their lives. Yes, some buyers are greedy, but some are just uneducated in the matter and presume the lender is not there to provide them with a trap.
They can't depend on some lenders. Some lenders, like myself, offer sound advice and do 99% fixed rate, full doc A-paper.
The majority of the foreclosures stem from Alt-A & subprime ARMS and negative amortizing garbage often combined with limited or no doc income documentation.
Any lender that marketed option ARMS (negative amortization) to the general public is scum in my book and there were literally thousands of them doing it.
They can't depend on some lenders. Some lenders, like myself, offer sound advice and do 99% fixed rate, full doc A-paper.
The majority of the foreclosures stem from Alt-A & subprime ARMS and negative amortizing garbage often combined with limited or no doc income documentation.
Any lender that marketed option ARMS (negative amortization) to the general public is scum in my book and there were literally thousands of them doing it.
The problem is that the kind of people who fall prey to these practices don't know there is a difference from lender to lender and from mortgage to mortgage and haven't heard of any of the vocabulary you're using... People say what rate they got (many times even on this forum). They may very well have no idea what type of loan it is.
Now that the market is crumbling - we don't even know if we'll be able to sell our house for what its worth (we just purchased it 2 years ago) and move on.
You mean you don't know if you'll be able to sell your house for what you own on it or purchased it for, that is much different than
"what its worth". Its only worth as much as someone is willing to pay for it.
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