Just Curious

[Sugar Magnolia]

I hear abut how easy it has been to get credit over the last few years leading to the recent financial crisis. How easy was it for you to get a loan? What did your lender require of you to get your loan?

 

The last loan I got for anything was in 1993 and the paperwork we had to submit to show we were worthy of a loan was incredible based on our credit history and low risk. Here was our profile and what we had to go through.

 

We were putting 60% down on a house and borrowing 40%. We had a high credit rating. Our montly mortgage was 13% of our income. We had no other outstanding loans not even a car loan, and no credit card debt. We had a 10 year history of paying our monthly mortgage on time and with our new loan, our montlhy payment would not go up. We had 3X the amount of the loan we were applying for in liquid assets, so we could easily pay off the loan if we lost our jobs.

 

But still we had to provide 12 months of bank statements, and three months of my husband's pay stubs. He had to provide a letter from his new employer stating his new salary. Since I owned a business and was self employed I had to provide three years of tax returns, a current profit and loss statement, and provide a letter stating that by me moving 70 miles away from my business office, it would not impact the profitability of my company. Escrow took 45 days to process all of the paperwork.

 

Do lenders still ask for all of this? Do they really look at this informaiton or care, or were they just extending credit to anyone with a pulse?

 

Just curious.

[Outshined]

I hear abut how easy it has been to get credit over the last few years leading to the recent financial crisis. How easy was it for you to get a loan? What did your lender require of you to get your loan?

 

The last loan I got for anything was in 1993 and the paperwork we had to submit to show we were worthy of a loan was incredible based on our credit history and low risk. Here was our profile and what we had to go through.

 

We were putting 60% down on a house and borrowing 40%. We had a high credit rating. Our montly mortgage was 13% of our income. We had no other outstanding loans not even a car loan, and no credit card debt. We had a 10 year history of paying our monthly mortgage on time and with our new loan, our montlhy payment would not go up. We had 3X the amount of the loan we were applying for in liquid assets, so we could easily pay off the loan if we lost our jobs.

 

But still we had to provide 12 months of bank statements, and three months of my husband's pay stubs. He had to provide a letter from his new employer stating his new salary. Since I owned a business and was self employed I had to provide three years of tax returns, a current profit and loss statement, and provide a letter stating that by me moving 70 miles away from my business office, it would not impact the profitability of my company. Escrow took 45 days to process all of the paperwork.

 

Do lenders still ask for all of this? Do they really look at this informaiton or care, or were they just extending credit to anyone with a pulse?

Just curious.

 

That was the case about three years ago. Things have tightened up a lot since then. The Mortgage gurus would be able to comment better.

[wiegie]

closed on our house about five weeks ago

 

1 W2

1 pay-stub

1 letter from employer

20% down

payment about 15% of gross income

house price about 2.5 times annual income

good credit scores

=

no problem at all

 

(our realtor had told us that a person with pretty much everything similar to us but only having 5% down was having some problems though)

 

I'll note that we went through our credit union and unlike most banks and mortgage companies these days, they hold their mortgages until maturity.

Edited September 25, 2008 by wiegie

[yo mama]

closed on our house about five weeks ago

 

1 W2

1 pay-stub

1 letter from employer

20% down

payment about 15% of gross income

house price about 2.5 times annual income

good credit scores

=

no problem at all

 

(our realtor had told us that a person with pretty much everything similar to us but only having 5% down was having some problems though)

 

I'll note that we went through our credit union and unlike most banks and mortgage companies these days, they hold their mortgages until maturity.

Yeah, but you have tenure. That's like wearing 10 wolf shirts.

[The Irish Doggy]

We had:

 

last year's tax returns

current month pay stub

checking, savings, IRA, 401K current statements

10% down

house was about 2X our combined yearly income at the time

750+ credit scores

 

No problems.

[Missoula Griz]

If you have decent credit and your income can support existing debt and new house payment, its still pretty simple. FHA is changing the downpayment to 3.5% soon.

 

5% down conventional loans are getting more difficult. Mortgage insurance is also getting more strict.

 

All in all, mortgage lending restrictions are not as bad as the media makes them out to be.

 

There is less mortgage competition. My volume is up from 2007.

[Sugar Magnolia]

So maybe it's how little people were putting down on their homes that are creating some of these issues which would make sense why mortgages are now higher than what the home is worth in many cases. Maybe also getting ARM's, and now having to refinance and unable to afford the new rate?

 

When I first bought a home (1983) 20% was expected by lenders even in No. Cal., and 10% was where borrowers were having trouble quailfying and at 10% moartage issurance was required.

 

BTW, back in '83 interest rates were 14.5%. Back then we were able to assume a vet loan from the previous owner at 11%, but assuming mortagages went away soon after.

[Kid Cid]

We bought in 2001. We had to provide 1 recent pay stub each, the previous year's tax return, checking and savings info. Credit above 750. Zero down, no points, no PMI. Of course, we bought a house that cost about half of what we qualified for, unlike an incredibly large number of people it seems.

[Kid Cid]

So maybe it's how little people were putting down on their homes that are creating some of these issues which would make sense why mortgages are now higher than what the home is worth in many cases. Maybe also getting ARM's, and now having to refinance and unable to afford the new rate?

 

When I first bought a home (1983) 20% was expected by lenders even in No. Cal., and 10% was where borrowers were having trouble quailfying and at 10% moartage issurance was required.

 

BTW, back in '83 interest rates were 14.5%. Back then we were able to assume a vet loan from the previous owner at 11%, but assuming mortagages went away soon after.

The ARM is a big gotcha for a lot of people. We took a 30 year conventional when we bought because we bought for the long haul and we understood the potential problems with a mortgage that suddenly triples or quadruples in size overnight. However, money was available so cheap back then, that some very smart people took ARMs just assuming that they could refi into a conventional before the ARM switched and make out on the deal. Some did, a lot did not, because they were put in a position where they couldn't afford the payments on a conventional either.

 

There are some poeple that just couldn't stop either. The idea that every house they bought was just a starter houe for the next one they were going to buy. Some people made out very well by flipping their house every three years. I know a couple that just kept trading up until they could get into that 800k McMansion they wanted with only about half of that ina mortgage. They rest was equity earned on their earlier houses. I'm pretty sure that they are struggling VERY hard right now but hey, they got that big assed house in that special gated community with the golf course.

[Jimmy Neutron]

We have not actually bought, but pre-qualified with a couple of W-2s and an equity check on our existing home.

[wiegie]

I read a 93-page research paper on this whole mess today and one of the things the paper argued was that the whole subprime mortgage lending situation was predicated on the idea that housing prices would rise allowing people to refinance into other types of mortgages. Then when housing prices stopped rising, the whole damn thing fell apart.

[Jimmy Neutron]

I read a 93-page research paper on this whole mess today and one of the things the paper argued was that the whole subprime mortgage lending situation was predicated on the idea that housing prices would rise allowing people to refinance into other types of mortgages. Then when housing prices stopped rising, the whole damn thing fell apart.

 

Thank you for saving me 92 and 7/8 pages.

[Puddy]

I read a 93-page research paper on this whole mess today and one of the things the paper argued was that the whole subprime mortgage lending situation was predicated on the idea that housing prices would rise allowing people to refinance into other types of mortgages. Then when housing prices stopped rising, the whole damn thing fell apart.

 

That's absolutely what happened. Some lenders were so brash that they were lending 125% of the appraised value of the homes

[Catfish]

I closed on a house in mid July. It was not hard at all two pay stubs and W-2s. I should note that I was sold a condo I had for eight years, walking away with enough for a twenty percent down payment. I also used the same bank that did my condo mortgage and a few past car loans so there was some good history. I also have good scores and have been a State Employee for ten years.

[The Irish Doggy]

Thank you for saving me 92 and 7/8 pages.

 

[TimC]

I built in '94 with an okay credit score and they told me what I could afford and were very strict with it. I barely had 10% down payment and had to struggle to qualify with an FHA loan.

 

I built again in '06 and had over 30% down with an 800 credit score and they said "pretty much anything I want". It was ridiculous. If I hadn't put my own limits in place (because I'm semi-intelligent) it would've been very easy to go overboard and be in trouble. So, I'd say it was a little crazy there at the end of the boom.

[MrTed46]

Purchased my 1st home 14 months ago with very little paper work (was alot easier than I thought). Lucky for the banks I am financially stable and able to pay it without any problems...but I can see how people and mortgage brokers run into problems.

[BiggieFries]

Just closed on a house roughly 20 days ago...

 

Needed 2 years worth of w-2s AND full tax returns

last 2 years of employment history along with verification

all bank statements for last 2 months

all 401K statements for last 2 months

all investment statements for last 2 months

 

we were putting down a little over 30% and we both have becon scores over 750.

 

Today we are closing on a refinance for this same house due to int rates dropping quite a bit last week so we jumped at it. Day after we "locked in" a rate all rates shot back up.

All the mort company needed was my ssn and a verification of employment.... that's it.

 

So I don't know what the differences are/were

[SEC=UGA]

Closed September of 2006

 

2005 Tax Return

2006 YTD most recent pay stub

Credit of 700+

20% down

But much less house than I qualified for

30 year fixed mortgage

[Missoula Griz]

All the mort company needed was my ssn and a verification of employment.... that's it.

 

So I don't know what the differences are/were

 

Rate/term refinance with plenty of equity and good credit on a primary residence is one of the easiest loans to get. I assume the automated underwriting approval only asked for proof of employment, which can be handled by a phone call from the processor. I am sure you signed a 4506, which allows the investor to get copies of your tax returns from the IRS, upto 60 days from the loan funding.

[BiggieFries]

Rate/term refinance with plenty of equity and good credit on a primary residence is one of the easiest loans to get. I assume the automated underwriting approval only asked for proof of employment, which can be handled by a phone call from the processor. I am sure you signed a 4506, which allows the investor to get copies of your tax returns from the IRS, upto 60 days from the loan funding.

 

Yep. So that answers that!

[muck]

I'm self-employed.

 

All mortgage applications are FUBAR'd.

[twiley]

I'm self-employed.

 

All mortgage applications are FUBAR'd.

Yeah, I couldn't even touch a loan until I was incorporated.

[Perchoutofwater]

We are in the middle of refinancing. They asked for one pay stub from each of us, and tax return. Both of our credit scores are above 700. We also had to sign a about 3 forms. We've been approved, but unfortunately we didn't get the paper work in until this week, and rates have gone up. Hopefully they will go back down next week, and we will lock it in. If not we just won't re-fi. I was just looking at saving some money, and getting some cheap cash to do some improvements.

[Big Country]

Yeah, I couldn't even touch a loan until I was incorporated.

 

With your avatar, screw touching the loan, I'll just touch myself.