Qualifying for mortgage

[moonmagick]

Personally I think they should take all of your income and expenses into account when qualifying you for a mortgage. I have a friend who just got qualified for a mortgage on a second property she was thinking of purchasing for a rental. She decided not to do it, because after looking at her budget she realized that she would be in trouble if it took a while to rent out the second property, or if her tenants didnt make payments on time. She said that she would be able to afford both houses but she couldnt have electricity in both or eat. It got me to thinking, they should take into account all of your expenses, not just things like auto loans and credit card debt before approving a mortgage. I wonder how many people get approved for mortgages they really cant afford and then jump on a sinking ship straight to bankruptcy.

[randomthoughts1875]

You certainly make a good point moon. This type of lending is what probably leads many people into debt. It is so easy for someone to overextend themselves when offers are so readily available. Hopefully your post will help others to realize that they need to look at their budgets with a hard eye before taking on any new responsibilities...even if the money is available.

[aquariancore]

I used to build in sell new homes and I've watched people literally mortgage their life away and sit in a house with one room of furniture for a couple of years.

[randomthoughts1875]

It's kind of sad that people want to keep up with the Jones's this badly. I've also been reading a lot about predatory lenders lately, I'm sure they've caused more than one person to over extend themselves. As a former builder/seller of new homes do you have any advice on the process?

[katharina]

Quote:

Originally Posted by randomthoughts1875

It's kind of sad that people want to keep up with the Jones's this badly. I've also been reading a lot about predatory lenders lately, I'm sure they've caused more than one person to over extend themselves. As a former builder/seller of new homes do you have any advice on the process?

I don't think it applies to just keeping up with the Jones'... this could (and often does) apply to anyone who is approved for a mortgage.

[katharina]

Quote:

Originally Posted by moonmagick

She said that she would be able to afford both houses but she couldnt have electricity in both or eat. It got me to thinking, they should take into account all of your expenses, not just things like auto loans and credit card debt before approving a mortgage. I wonder how many people get approved for mortgages they really cant afford and then jump on a sinking ship straight to bankruptcy.

I'll bet a lot of people get so excited about qualifying for a mortgage that they forget to factor some of these things in... I almost forgot a few of them myself. There are things like personal and property taxes, various insurances, gas for the car, high heating costs, and FOOD, yes.

[PiscesGirl]

Property taxes and insurance are taken into account for qualifying. But you are correct on how people get excited about qualifying. I think with the sub prime problem that we will see tighter reins. In fact we are starting to see it already in my area.

[katharina]

Quote:

Originally Posted by PiscesGirl

Property taxes and insurance are taken into account for qualifying. But you are correct on how people get excited about qualifying. I think with the sub prime problem that we will see tighter reins. In fact we are starting to see it already in my area.

I was referring mostly to the personal taxes some states have, car insurance, health insurance, and life insurance. Property taxes are usually paid with escrow from the mortgage, yes. Auto, health, and life insurances add up to thousands of dollars that some people don't take into consideration when budgeting to see if they can afford a particular home.