Are people who shouldn't still getting mortgages?

[puppydoggie]

I don't know people's financials, but I can speculate off of what they tell me...but it seems like a lot of keeping up with the Joneses where I live and I wonder how some people are getting mortgages for 400k+ up to 600k houses on salaries close to my husband's. Our max mortgage (self determined)was 290k. We could not nearly max our retirement and save for college otherwise. We still live quite tight. So...just pondering if the mortgage industry is still being loose?

I am just being curious!! The word is not *judging*, but perhaps, jealous! I can ask without being attacked on this...

[Deleted]

How do you know what these people's salaries are? How do you know the rest of their financial picture?

I think it is best to just shrug and move on rather than passing judgment.

[Deleted]

Well, you said it, you don't know people's financials. How do you know what their salaries are? How do you know how much they have saved? Do they have inheritances? Maybe they have less debt than you? Maybe they dont have the same childcare costs?

[Deleted]

maybe..but who knows? There a lot of other factors. They may have an inheritance, additional income, or they aren't saving for college, etc.

[everam01]

Maybe they have a huge downpayment and are taking a smaller mortgage than you think. You never know the entire picture. I have friends who just bought a $250K house on $40K of salary, and I later found out her parents actually bought it and they are just making payments to them.

[mollybrown]

Some people don't max retirement or save for college. Those are your priorities, and banks aren't going to deny people mortgages to make sure they do those things. Most people would be tight if they sent $50,000 to savings off the top!

Also:
inheritances
investments
gifts from relatives
credit cards
prostitution

[flygirl22]

I don't think maxing out retirement and paying for college should be a consideration for qualifying for a mortgage.

I don't max out my retirement (20% a year?), I have a pension and a company match. My retirement is doing just fine. My parents didn't pay for my college, I do just fine.

[Deleted]

Oct 11, 2012 11:45:00 GMT -5 puppydoggie said:

Our max mortgage (self determined)was 290k. We could not nearly max our retirement and save for college otherwise. We still live quite tight. So...just pondering if the mortgage industry is still being loose?

I am just being curious!! The word is not *judging*, but perhaps, jealous! I can ask without being attacked on this...

I consider what I quoted from your first paragraph as judging. You're assuming that the mortgage industry was "loose" with them and that they're unable to max out their retirement and save for college (assuming those are goals for them -- for me, for example, college savings is not exactly a priority).

It isn't your business or anything worth wondering about because you'll never know the answer.

ETA: And I'm sorry, but the title of your post "Are people who shouldn't still getting mortgages?" is ridiculously judgey. You're assuming that these are people who *shouldn't* have qualified for the mortgages they got.

[chessie]

Different priorities. I check all the time on mortgage rates and what I could get, I could get a pretty large mortgage with matching / maxing out retirement and not 529 for future kids. It depends what your goals are though, I rather have a nice house/land myself though and pay more for it.

[bugandbibs]

I think things are starting to get loose again. I keep hearing an ad on the radio stating "they give mortgages to people who didn't qualify at other banks".

Honestly, it's hard to judge other people's financial health from the outside looking in. I do think that the last few years haven't taught people what it should have about handling their money. People still want what they want when they want it. Very few of my friends are saving towards retirement, but they go on fancy vacations paid for with credit cards. That's not how I roll, but I'm only in charge of me.

[Deleted]

Oct 11, 2012 11:49:37 GMT -5 mollybrown said:

Also:
prostitution

Love how you slipped that in there;)

[Susie]

Oct 11, 2012 11:45:00 GMT -5 puppydoggie said:

Our max mortgage (self determined)was 290k. We could not nearly max our retirement and save for college otherwise. We still live quite tight. So...just pondering if the mortgage industry is still being loose?

Not necessarily. Those are personal priorities that you have set -- maxing out (not just "saving something for") retirement and saving for college. You know not everyone shares those priorities, right?

[puppydoggie]

Oct 11, 2012 11:53:26 GMT -5 v said:

Oct 11, 2012 11:45:00 GMT -5 puppydoggie said:

Our max mortgage (self determined)was 290k. We could not nearly max our retirement and save for college otherwise. We still live quite tight. So...just pondering if the mortgage industry is still being loose?

I am just being curious!! The word is not *judging*, but perhaps, jealous! I can ask without being attacked on this...

I consider what I quoted from your first paragraph as judging. You're assuming that the mortgage industry was "loose" with them and that they're unable to max out their retirement and save for college (assuming those are goals for them -- for me, for example, college savings is not exactly a priority).

It isn't your business or anything worth wondering about because you'll never know the answer.

ETA: And I'm sorry, but the title of your post "Are people who shouldn't still getting mortgages?" is ridiculously judgey. You're assuming that these are people who *shouldn't* have qualified for the mortgages they got.

Yes, it is none of my business. But, thanks for coming in here and finding a way to attack me. My post is not angelic, but this is a forum where things can be said that are NOT said in real life. Ok, so it's judgey, I retract my non-judgey statement. So what?

[sillygoosegirl]

What shocks me is that there are still 3% down mortgages. That seems too risky for the mortgage holder, especially with home prices continuing to fall.

[ssmjlm]

There will always be people who probably shouldn't be getting a mortgage who do or those who are told they qualify for up to X on paper, but in reality they should probably shave $50k off that amount.

My BIL has a really nice $400k house, but he's refinanced so many times to pay off cc debt that now he can't pay his bills with their full time jobs, so he has to work a 2nd job. Oh and he doesn't have anything saved period, let alone for college and just took a 401k loan on his measely retirement account.

[starlily]

Oct 11, 2012 12:08:00 GMT -5 sillygoosegirl said:

What shocks me is that there are still 3% down mortgages. That seems too risky for the mortgage holder, especially with home prices continuing to fall.

Markets vary. Prices are certainly no longer falling where I am at.

[badtzmaru22]

We have a reasonable mortgage for our salaries, but even if we rented, we couldn't afford to max out two 401ks. Should we not be able to get a mortgage? We do save for retirement, but 34k a year off the top is not possible for us.

[kaylie]

I felt like the standards were kind of loose when we got our mortgage (6 months ago). The bank gave us a max $100K above what we actually bought at and I just can't believe they thought that was responsible lending. We've definitely felt more of a financial squeeze since closing so the idea that we could have gotten a loan that was so much larger is crazy to me.

[Deleted]

Also, since in this day and age women can drive and vote and get jobs and even earn decent salaries and stuff, if you're just comparing husbands' salaries (which it sounds like you may be doing) can give you a very inaccurate view of people's finances.

But at any rate, it is futile to speculate about this stuff because even if you're talking about the same level of household income, you're likely still comparing apples and oranges in several respects.

[jene]

Different people have different priorities. Your definition of living tight may be having 10k in the bank at all times, and others may see $10 and say, woo hoo, Taco Bell!

[pantsparty]

Well, our loan officer told us we qualified for a $5,000 monthly payment. We do well, but paying that much in a mortgage (over 2x what we pay now) is not desirable to either of us. Of course they push you to take out the max loan - they make more that way.

[my4girls]

well since we're actually going through the home buying/ mortgage process right now and I, myself, without DH salary qualified for 7.9x (I broke out a calculator to determine that lol) my annual salary (including my bonuses-11.8x my base) in a mortgage I am going to say yea some people who "shouldn't" are getting a mortgage they can't afford.

[downtoearth]

Oct 11, 2012 11:45:00 GMT -5 puppydoggie said:

I don't know people's financials, but I can speculate off of what they tell me...but it seems like a lot of keeping up with the Joneses where I live and I wonder how some people are getting mortgages for 400k+ up to 600k houses on salaries close to my husband's. Our max mortgage (self determined)was 290k. We could not nearly max our retirement and save for college otherwise. We still live quite tight. So...just pondering if the mortgage industry is still being loose?

I am just being curious!! The word is not *judging*, but perhaps, jealous! I can ask without being attacked on this...

Yes, I know of two people who still got a mortgage following foreclosing on their first house due to a high ARM and it not being 7+ years from that time. So yes, mortgage companies will always try to find people who are willing to enter the market and make the mortgage happen. Of those 2 people, one even got a 0% down second mortgage somehow?!

[Deleted]

I know of someone who purchased a home in active Chapter 13 bankruptcy, with approval from their trustee. How they found a lender to approve that is beyond me. He said his down payment wasn't that much, so who knows.

Either way, I think there will always be shady lenders and shady loan officers who will push anything through to get their cut of the pie. Such is life.

[krystee]

Anecdote alert! Yes, I think banks are still giving out too much money because they are willing to give ME too much money. Despite the fact that they don't count any rental income from our first house--meaning they show that we owe that full $1,750/month, on top of our big SLs and also a car--they are willing to qualify us for another $1,700/month mortgage. That means, they are fine with us owing $4,000/month on debt payments, when our takehome pay is currently $5,000/month.

[schrodinger]

I know of two people that were given mortgages when their financial picture suggests that they shouldn't have. Both these people have admitted to be being on the brink of bankruptcy multiple times. Neither of them have secure jobs/incomes or spouses that work. Both have credit card debt that exceeds 50% of their annual income.

I think its irresponsible their ends to purchase, as well as the banks to consider them for mortgages. I really wish that banks had a test for financial knowledge. If you passed, you were given options for non-traditional lending. If you fail, your only option is a 15-30 year conventional loan with 20% down.

[iheartvino]

The issue is that the formula that lenders use to determine mortgage eligibility is bad, and that wasn't an issue that was addressed after the mortgage crisis. They look at your total pay (vs. take home pay, meaning they don't account for taxes) and any revolving debt that you have, but they don't account for heating and cooling costs, water bill, transportation costs (outside of an auto loan), etc.