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Nah, you can easily get a residential mortgage from smaller lenders with just proof of income/savings, and the sort of light credit usage you get from monthly C
by tiedieconderoga 3y ago
Nah, you can easily get a residential mortgage from smaller lenders with just proof of income/savings, and the sort of light credit usage you get from monthly CC payments, rent, utilities. That will net you a solid credit score, too.
The issue is with very large banks. They have rigid underwriting deparments and poor CS, so if you approach them as a first-time buyer who isn't already leveraged to the hilt, they will make it a long and painful process. Mortgage agents are a prime target for AI replacements, because all they do is relay information between you and the underwriting departments that make the real decisions.
Other people have pointed out that when you take a loan for something you can afford, you can use the money you would have spent on other things in the meantime. (As long as you're confident that you'll keep making enough money to make your payments for the life of the loan.)
- HWR_14 3y agoRent and utilities rarely report to credit scores.
- no_wizard 3y agoThere's been normalization around using rent as additional inputs into a credit score: https://www.cnbc.com/select/your-rent-payments-can-raise-your-credit-score-with-experian-boost/ https://www.cnbc.com/select/your-rent-payments-can-raise-you... I'm not sure they're all that available or popular (they're highly dependent on your landlord having the correct paperwork and such) but the place I rented an apartment last year had this available and it did get reported
- HWR_14 3y agoYes, that's been a push for a while. I'm glad to see it's becoming more popular. But it doesn't work if unless the landlord opted into their payment system.
- nickjj 3y agoThat's such a strange system if common routine things aren't counted towards your score. Is this a ploy to get you to buy things you don't need just to prove you can pay it back? Personally I've never owned a credit card, I always pay with a debit card or cash. 20 years ago I refused to participate in the credit scoring system and still stand by it.
- HWR_14 3y agoI don't think it's a ploy. I think it's an accident of how the people who designed the credit score used credit. And then inertia keeping things from being updated.
- nickjj 3y agoIt's messed up because rent could be let's say $800 to $3,500 a month, if paying that every month on time isn't an indicator that you have consistent income to reduce risk on other loans then I don't know what is. It's especially messed up if the same system will ding your score if you buy $8 headphones and forget a payment.
- HWR_14 3y agoThings are slowly being updated. And rent not being included is a pretty big error that needs fixing.
- c22 3y agoLast time I got a loan they asked me about my rent/mortgage (and utility!) payments so they could subtract that amount from my take-home pay when determining the risk of me defaulting on the loan. They seemed to assume I'd be paying my rent first and consistently regardless of any other debts I'd accrued.
- HWR_14 3y agoI think that's a valid assumption. That's also why it's easier to get a mortgage on your primary house instead of an investment property.