4 ms·

Without saying how much you asked for, this is a non-story.

by dazc 5y ago

tosh 5y ago
> $840K mortgage with 20% down for a $1.05M offer. House not appraised yet, but almost certainly above offer price since all comps from the realtor are $1.2M. https://twitter.com/dvassallo/status/1513685250655760384 https://twitter.com/dvassallo/status/1513685250655760384
- rsynnott 5y ago
  That's over four times their demonstrable annual earnings (if your earnings are as inconsistent as this, a bank is not generally going to care very much about what you were earning two years ago). Totally unsurprising that they were turned down, surely? Also unclear whether this is earnings from a job or something else (the "adjusted gross income" would make me suspect at least partially something else). In a time of uncertainty, banks are going to be cautious, and some lenders realistically don't want to touch self-employed etc at all.
  - SilasX 5y ago
    Also answered: He paid himself out a salary that was a small fraction of those figures (but most of which was self-employment income): https://twitter.com/dvassallo/status/1513683918058262528 https://twitter.com/dvassallo/status/1513683918058262528 There was also a tweet saying how much of the last year was investment income, but I can't find that and Twitter actively makes that hard to search for.
    - rsynnott 5y ago
      Yeah, so he should be going to a specialist broker/lender, not a random bank.
      - quantified 5y ago
        A small bank or S&L that services the loan after issuing is more likely to issue the mortgage. And it’s more likely to benefit the community compared to a big bank. Worked for me.
  - parkingrift 5y ago
    Banks were lending seven times annual earnings as of 2021. I have not seen updated numbers, but four times earnings is likely on the lower end of the average loan to income ratio.
    - rsynnott 5y ago
      Wait, really? I didn't know it had gotten that bad again; those are subprime crisis sort of numbers.
      - parkingrift 5y ago
        Yes. However, it doesn't actually say much about affordability because interest rates drive such a large percentage of costs. A $285,000 mortgage (ignoring taxes+fees) would be $1,126/month at 2.5% APR but $1,618/month at 5.5%. If you use "conventional" lending standards a borrower with a household income of around $39k could qualify at 2.5%, but at 5.5% the income requirement would jump up to around $55k. The ratio drops from around 7.3 to 5.1. https://www.longtermtrends.net/home-price-median-annual-income-ratio/ https://www.longtermtrends.net/home-price-median-annual-inco...
Dylan16807 5y ago
It says he didn't even get that far, because they treated his income as almost nothing.
- FireBeyond 5y ago
  It doesn't say that - it says they found his income too inconsistent, year to year.
  - Dylan16807 5y ago
    It does say that. >> Few variables are missing here like the mortgage amount you are asking for and the upraised value of the house. > [numbers] But we didn't even get to that state with this lender. > They excluded all my business income because it’s too inconsistent. Quote: “Your business income is too inconsistent. Only usable income is capital gains $14,527 + $780 rental income.” Didn't get to house details, income was treated as $15k which is under the poverty line.

Without saying how much you asked for, this is a non-story.

by dazc 5y ago

Without saying how much you asked for, this is a non-story.

tosh 5y ago

> $840K mortgage with 20% down for a $1.05M offer. House not appraised yet, but almost certainly above offer price since all comps from the realtor are $1.2M. https://twitter.com/dvassallo/status/1513685250655760384 https://twitter.com/dvassallo/status/1513685250655760384

rsynnott 5y ago
That's over four times their demonstrable annual earnings (if your earnings are as inconsistent as this, a bank is not generally going to care very much about what you were earning two years ago). Totally unsurprising that they were turned down, surely? Also unclear whether this is earnings from a job or something else (the "adjusted gross income" would make me suspect at least partially something else). In a time of uncertainty, banks are going to be cautious, and some lenders realistically don't want to touch self-employed etc at all.
- SilasX 5y ago
  Also answered: He paid himself out a salary that was a small fraction of those figures (but most of which was self-employment income): https://twitter.com/dvassallo/status/1513683918058262528 https://twitter.com/dvassallo/status/1513683918058262528 There was also a tweet saying how much of the last year was investment income, but I can't find that and Twitter actively makes that hard to search for.
  - rsynnott 5y ago
    Yeah, so he should be going to a specialist broker/lender, not a random bank.
    - quantified 5y ago
      A small bank or S&L that services the loan after issuing is more likely to issue the mortgage. And it’s more likely to benefit the community compared to a big bank. Worked for me.
- parkingrift 5y ago
  Banks were lending seven times annual earnings as of 2021. I have not seen updated numbers, but four times earnings is likely on the lower end of the average loan to income ratio.
  - rsynnott 5y ago
    Wait, really? I didn't know it had gotten that bad again; those are subprime crisis sort of numbers.
    - parkingrift 5y ago
      Yes. However, it doesn't actually say much about affordability because interest rates drive such a large percentage of costs. A $285,000 mortgage (ignoring taxes+fees) would be $1,126/month at 2.5% APR but $1,618/month at 5.5%. If you use "conventional" lending standards a borrower with a household income of around $39k could qualify at 2.5%, but at 5.5% the income requirement would jump up to around $55k. The ratio drops from around 7.3 to 5.1. https://www.longtermtrends.net/home-price-median-annual-income-ratio/ https://www.longtermtrends.net/home-price-median-annual-inco...

Dylan16807 5y ago

It says he didn't even get that far, because they treated his income as almost nothing.

FireBeyond 5y ago
It doesn't say that - it says they found his income too inconsistent, year to year.
- Dylan16807 5y ago
  It does say that. >> Few variables are missing here like the mortgage amount you are asking for and the upraised value of the house. > [numbers] But we didn't even get to that state with this lender. > They excluded all my business income because it’s too inconsistent. Quote: “Your business income is too inconsistent. Only usable income is capital gains $14,527 + $780 rental income.” Didn't get to house details, income was treated as $15k which is under the poverty line.