Last month I bought a house in Potomac, Md., a trade-up on my current home, and was shocked to learn in the ensuing weeks that I couldn't get a mortgage loan. First, I went to PNC bank. Then Wells Fargo. Then another. Denied. Denied. Denied.
No, I don't feel entitled to a loan, and the banks have every right not to lend me money. But my tale of woe tells a broader tale of what is going on in the lending industry these days.
All the bankers told me the same thing: "Steve, if you'd walked in our bank eight years ago with this mortgage application, we would have rubber-stamped it in five minutes, and you would have walked out with a bag of money."
Those were the go-go days of the real estate frenzy when people who worked at McDonald's could walk into a Countrywide and get a $600,000 mortgage. Back then, underwriting standards were tossed out the window.
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Try to get a student loan. Same road blocks. Wells Fargo wanted over 40K for a 25k loan for college!
ReplyDeleteBack then the test was can you pay this. If you answered yes then they lent you money. Not very responsible. I just bought a house and the new regs are a ton of headache.
ReplyDeleteHow in the world can you buy a house and not already have finances beforehand?
ReplyDeleteYou haven't bought a house in while!
DeleteYou cannot afford the house, those rules are in effect so not to repeat what was going on. Your better off.
ReplyDeleteI had to have 30% down payment on mine. Jumbo loans are not what they use to be.
ReplyDeleteThe author claims his credit score was low because he missed two payments in 30 years.
ReplyDeleteScores count open loans and past loans up to 7 years. If he's got several loan products during this time, he's likely got 250+ payments on file. Missing less than 1% of them without going into default isn't going to amount to more than a few points.
My guess is that he's up to his eyeballs in utilization. 3-4 credit cards above 60% and a couple car notes and he's not going to have a lot of room for a bigger house payment.
This guy really needs to learn how credit scores work.
Agree with 4:03. Missed payments stay on for 7 years. Not 30 years. I once inadvertently missed a department store card payment by 30 days and took a very slight ding to my credit score which was already over 800. I did however see that red mark on my credit report yearly for the next 7 years until it finally dropped off. Credit utilization is a huge part of the score so if you keep balances on credit cards, even if you pay minimums on time, it will ding you. It's a good idea to get a copy of your credit report regularly to see what's going on.
ReplyDeleteIt's easy. Walk in with 20-25% down, cash money, and they will fight over who is going to give you the best rate. Just don't expect them to do a 100% loan, with nothing down (sub prime, to boot). THAT doesn't happen anymore. You can't get the loan that you can't afford anymore. If he signed a sale agreement for a new home, subject to finding financing, while still on the hook for his current home, its no wonder they won't talk to him. It was silly of him to think he could just walk in and get the money for a newer, upgrade to his current house. He is the kind of borrower that caused the real estate crash in 2008-2009. The likes of people like him, and the banks that enabled them.
ReplyDeleteMy guess is that he is upside down on his "current home" and thinks he can walk into a bank and buy another one.
ReplyDelete