Some banks are STILL doing nutty things... (mortgages)

[LisaKinVA]

Okay, we've been through all of this upheaval with mortgages, lending practices, etc. My dh and I were pre-approved for a $350,000 mortgage -- not an issue. That's a number we can comfortably afford. However, we thought the approval was contingent on selling our land. NOT the case. The bank is perfectly willing for us to take out a $350,000 mortgage, even though we would have a $750/mo payment (not including taxes) on our land -- more than 50% of our take home pay each month. :confused:

 

I thought banks were supposed to be MORE responsible lenders now (they certainly have made us jump through enough hoops!) Maybe I should be happy that we "know better." Because obviously some banks haven't learned...

Edited September 21, 2010 by LisaK in VA

[duckens]

More banks went under in the past year than the year before.

 

I'm sorry that I don't have a specific statistic for you, but it was in Newsweek about 3-4 weeks ago.

 

I must have actually tossed that magazine out after reading it.

 

--Duckens

who has been depressed about the economy since I started reading books about economics. Its so much easier to be ignorant.

[Margo out of lurking]

I think it has more to do at this time with your credit rating. We were recently approved for a new mortgage, and quite honestly, although *we* know we can swing it, I don't know what in the world the bank was thinking by giving us the money.

 

(We know we can swing it based on rental property that we own. However, the bank flat out refused to count that rent, but they counted that mortgage as a liability.)

[Alyce]

I can remember when we bought our house the times were even tougher. You had to have excellent credit, a sizeable downpayment and they whether or not you could get the loan was also dependent on how much you earned. You had to earn about half what the mortgage cost were. When we first got our home in 1985 the loops were outrageous and the interest rate was 12 percent. Most people couldn't afford homes and rented until they could come up with a down payment and qualify for the loan. Of course that was before the banks started getting greedy and shifty and the general public began to think it was their right to buy a home with no thought as to wether they could actually pay for it.

[KathyBC]

Most people couldn't afford homes and rented until they could come up with a down payment and qualify for the loan.

 

That statement must be based on location, I'm guessing. :confused: We couldn't rent a home here for what our mortgage payment is.

[Annabel Lee]

NM

Edited September 21, 2010 by Annabel Lee

[Alyce]

Back in the early 80's rent was much lower than it is now. It was a lot less expensive to rent a home than to buy one. This is because there were more people renting than buying. People just couldn't afford to buy. The normal thing was to get out of school, rent an apartment, get married, rent an appartment and save to hopefully eventually buy a house. My rent when I first got out of nursing school was $250 per month. When we finally bought our house our house payments were considerably more than that around $850 but that was at 12% interest for a house that sold for $80.000. Houses were cheaper then. If you owned a house that was more than $200,000 you were rich. Once the interest rates started dropping we did refinance out house and our house payments are $525 and we will probably be paying of the balance this month. I only say these things to help people have some perspective. It may be hard now but there was a time when it was even harder but again that was before people began to get the idea that it was their right to have a home no matter what the circumstance was. To some degree the housing collapse started when people began to have trouble paying their mortgages and in a lot of the cases that was because they felt they were owed a house and since the bank was so eager to give them one theyd buy one. They didn't consider their budget or their income and many took on more than they could chew. And when jobs started to be cut it just got worse. I'm not saying that is the case for you personally just that things have changed a lot in the last 30 years and not always for the better. If the banks had not gotten greedy and made it easier for people to get loans and inflated the cost of the house we'd be in much better shape today then we are.

[sassenach]

Okay, we've been through all of this upheaval with mortgages, lending practices, etc. My dh and I were pre-approved for a $350,000 mortgage -- not an issue. That's a number we can comfortably afford. However, we thought the approval was contingent on selling our land. NOT the case. The bank is perfectly willing for us to take out a $350,000 mortgage, even though we would have a $750/mo payment (not including taxes) on our land -- more than 50% of our take home pay each month. :confused:

 

I thought banks were supposed to be MORE responsible lenders now (they certainly have made us jump through enough hoops!) Maybe I should be happy that we "know better." Because obviously some banks haven't learned...

 

I doubt that would make it past the underwriter. Pre-approvals seem to come from a different planet than the underwriter usually lives on.

[Alyce]

Remember that in 1985 the interest rates were extremely high which made buying a house almost impossible. Since you couldn't buy your own you rented an apartment and there were some houses for rent but mostly you lived in an apartment. The cost of living is said to be high but it was even higher in the early 80's. Most people don't remember those times so they think that things are so bad now. They are but there have been times when in some ways they were worse. When we went to purchase our house I was a nursing making $40,000 a year and my husband made $30,000 per year. We were in a very high income bracket for that time period. We prayed that we would find a house we could afford. We found one at $80,000, then we sweated that we would be approved to receive a loan. We had no debt, everything was paid for and credit cards weren't as popular or accepted everywhere the way they are now. We were turned down by two companies. It took us 4 months to get approved and finally close the house. It was a lot of money for us to pay at that time but we knew we could do it even if one of us lost our job. That part was factored into whether or not we could get the loan in the first place. Getting a house in todays market is much easier than it was when I was young.