Q. When you check your credit score or report it shows that you have so much debt and then it shows available credit you have left if you were to get like a car loan or school loan. So how does a home loan fit into that. Do they go by that available credit or what they expect it to be within the regular 30 year mortgage period?
A. Available Credit is what you have open but are not using. Like if you have a credit card with a limit of $1000 and you have $300 on it you would have $700 available credit.
For home loans we look at the last two years and we try to predict out three years. We ask questions like do you expect this income to continue?
We take your gross income (before taxes) and take 45% of it, then we subtract your debts (bills) to find out what your max payment can be.
Hope this helps Good Luck,
For home loans we look at the last two years and we try to predict out three years. We ask questions like do you expect this income to continue?
We take your gross income (before taxes) and take 45% of it, then we subtract your debts (bills) to find out what your max payment can be.
Hope this helps Good Luck,
Will conventional home loans be the next area of the credit sector to implode?
Q. I really dont see the end of this mortgage crisis. I am really woried that the next bubble to burst are the prime mortgage homes. Please give details as to why you think the way you say.
A. Sub prime loans are actually a type of conventional loan, just a non conforming type of conventional loan. Stated income and stated asset loans were available in both conforming and non conforming loan types but were still consider "prime" lending. However, these types of risky loans weren't restricted to just "sub prime" loans and the bubble has been bursting on the prime stated income/asset program. People that got a mortgage with just a good credit score were not ready for the perils of home ownership, they could not call the bank when the septic needed to be replaced. Between that and real estate taxes increasing at highest rate ever, and values going down, and if they got a adjustable rate then the payments soared. Interest only loans meant they most likely owe more than what the property is now worth and creating neg amortization. They were in way over their head. The lenders are already reverting back to old school lending with requiring documentation to be sure the borrower can actually afford the house. I see a lot more people not able to qualify for conventional loans and more people will get FHA loans, and with many states outlawing the use of stated income / stated asset loans the market will turn back and rebound. I think we still have a long way to rebound.
How did bad home loans create trillions of debt in the derivatives market?
Q. Bush goes on TV and lies, lies, lies.
A. Trillions is an exaduration on your part.
But the total value of the mortgage-backed securities was amplified by creating a global market exclusively for those derivitives. The market for this security exists at the tops of the financial world, and they were used to securitize banks, not just assets.
But the total value of the mortgage-backed securities was amplified by creating a global market exclusively for those derivitives. The market for this security exists at the tops of the financial world, and they were used to securitize banks, not just assets.
How do non-qualifying home loans work and how can I find them?
Q. What are the pro's and con's associated with non-qualifying loans?
A. They are gone! Gone since July of 2007! Here is the real deal! EVERY LOAN requires the buyer to sign a 4506. The 4506 is a form you sign when you apply for a loan. The form is sent into the IRS to see if the information you gave to the lender is indeed true and correct. If you lied on your paperwork the lender is required to inform the IRS of the difference and you could be taxed for the difference. The stated loans were originally intended for the self-employed borrowers who write off EVERYTHING, for some unknown reason, the lenders allowed W-2 employees to get in on the programs which is what caused a lot of the mortgage melt down! ( that is why they are gone and many people distroyed the self employed peoples opportunities!) But....if you have 20% for a down payment or equity try Wacovia!
How were the low quality home loans financed prior to the crisis?
Q. I think Ben Bernanke also gave a short speech about this, but I am not sure and can't find it. Can you guys please answer this, I am so lost right now? Thanks
A. Simply put loans were given to people who had no business being approved for one.
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