Just a thought about loans, lenders and our credit system.

[Anonymous]

              Years ago I remember my late grandfather telling me of how he went to the bank to obtain a loan for a mortgage, only to be denied because of not enough income. At the time he was paying way more in rent than what the mortgage payment was monthly. He showed proof of this to the bank but they still did not look at it this way. I understand how all of this works credit wise, and income to debt wise, but I do believe our system of credit and so forth are a bit flawed. Lenders should take into consideration "other" aspects of the equation when a borrower is shopping for a loan. I know they do in some cases, but it leaves one to wonder if they could be doing more. In his case he was able to show years of proof of payment made. For me, if I were a lender this would be enough evidence of risk assessment.

               Just looking for thoughts/opinions on this matter.

[youdontkillmoney]

---

@Anonymous wrote:

              Years ago I remember my late grandfather telling me of how he went to the bank to obtain a loan for a mortgage, only to be denied because of not enough income. At the time he was paying way more in rent than what the mortgage payment was monthly. He showed proof of this to the bank but they still did not look at it this way. I understand how all of this works credit wise, and income to debt wise, but I do believe our system of credit and so forth are a bit flawed. Lenders should take into consideration "other" aspects of the equation when a borrower is shopping for a loan. I know they do in some cases, but it leaves one to wonder if they could be doing more. In his case he was able to show years of proof of payment made. For me, if I were a lender this would be enough evidence of risk assessment.

               Just looking for thoughts/opinions on this matter.

---

^^^^^^^^

I think banks did change their view and loaned money out as such before 2008 when income was not sufficient so the entire home value was loaned out. Then in 2008 the housing bubble happened, the great Recession occurred and banks almost went out of business but were saved by the federal government by propping them up with all the monety the Federal gov had. Now we are back to requiring 20% down for conventional loans. Now gov. require banks to have strong cash reserves. So to do this they require enough of a down payment and income form the borrower. 

[Anonymous]

In my grandfathers case it was the 1950's before the age of credit scores, and the banks did more one on one questioning. I think this was all due to the fact of slow processing obtaining your records.

[takeshi74]

---

@Anonymous wrote:

              Lenders should take into consideration "other" aspects of the equation when a borrower is shopping for a loan.

---

Such as?  What do you think they're not considering today that they should be considering?  Things have definitely changed a lot since your grandfather went looking for that loan.

[Anonymous]

By dti rules I would guess there is not an apartment within 10 miles of me I can technically afford. It doesn't mean I havent, but that also doesn't mean a bank wants to loan me that much for 30 years.