Getting harder to qualify for mortgage loans…

[Anonymous]

Other than not being stupid enough to grossly overpay for a house, I don’t see why we couldn’t spend 50%+ of our gross income on a house.

That’s because owning a house is expensive and there are costs outside of your mortgage. At 50%+ of your income what money would you use to repair the roof if you have no savings? What money will you use to do basic maintenance? What will happen if you lose your job for just 3-4 months with no savings?

If you are loaning money to somebody you typically would want to ensure that the normal type of financial hardships don’t result in a foreclosure.

[UCGal]

[quote=beanmaestro]I have to admit, I don’t really follow the logic in these limits. Our expenses break down more or less as follows (well, before we bought a house)

25% taxes
35% savings
15% rent
25% other expenses

Other than not being stupid enough to grossly overpay for a house, I don’t see why we couldn’t spend 50%+ of our gross income on a house.[/quote]

Sure – you have 50% you could spend on housing (35% savings + 15% rent)… but you’re not typical.

The 45% is based on *most* people… In other words the non-piggs that don’t save 35% of their gross income. Up until very recently the savings rate in the US was actually negative (spending more than earning)… Now it’s a few percent.

[UCGal]

[quote=beanmaestro]I have to admit, I don’t really follow the logic in these limits. Our expenses break down more or less as follows (well, before we bought a house)

25% taxes
35% savings
15% rent
25% other expenses

Other than not being stupid enough to grossly overpay for a house, I don’t see why we couldn’t spend 50%+ of our gross income on a house.[/quote]

Sure – you have 50% you could spend on housing (35% savings + 15% rent)… but you’re not typical.

The 45% is based on *most* people… In other words the non-piggs that don’t save 35% of their gross income. Up until very recently the savings rate in the US was actually negative (spending more than earning)… Now it’s a few percent.

[UCGal]

[quote=beanmaestro]I have to admit, I don’t really follow the logic in these limits. Our expenses break down more or less as follows (well, before we bought a house)

25% taxes
35% savings
15% rent
25% other expenses

Other than not being stupid enough to grossly overpay for a house, I don’t see why we couldn’t spend 50%+ of our gross income on a house.[/quote]

Sure – you have 50% you could spend on housing (35% savings + 15% rent)… but you’re not typical.

The 45% is based on *most* people… In other words the non-piggs that don’t save 35% of their gross income. Up until very recently the savings rate in the US was actually negative (spending more than earning)… Now it’s a few percent.

[UCGal]

[quote=beanmaestro]I have to admit, I don’t really follow the logic in these limits. Our expenses break down more or less as follows (well, before we bought a house)

25% taxes
35% savings
15% rent
25% other expenses

Other than not being stupid enough to grossly overpay for a house, I don’t see why we couldn’t spend 50%+ of our gross income on a house.[/quote]

Sure – you have 50% you could spend on housing (35% savings + 15% rent)… but you’re not typical.

The 45% is based on *most* people… In other words the non-piggs that don’t save 35% of their gross income. Up until very recently the savings rate in the US was actually negative (spending more than earning)… Now it’s a few percent.

[UCGal]

[quote=beanmaestro]I have to admit, I don’t really follow the logic in these limits. Our expenses break down more or less as follows (well, before we bought a house)

25% taxes
35% savings
15% rent
25% other expenses

Other than not being stupid enough to grossly overpay for a house, I don’t see why we couldn’t spend 50%+ of our gross income on a house.[/quote]

Sure – you have 50% you could spend on housing (35% savings + 15% rent)… but you’re not typical.

The 45% is based on *most* people… In other words the non-piggs that don’t save 35% of their gross income. Up until very recently the savings rate in the US was actually negative (spending more than earning)… Now it’s a few percent.

[beanmaestro]

I appreciate that it’s based on a simplification of statistics, but if Family A makes twice what Family B makes, then Family A should be able to handle a higher percentage loan than Family B, since they could cut their non-house expenses further than Family B if needed.

Or maybe I’m just in the minority where costs are negotiably decoupled from income…

[beanmaestro]

I appreciate that it’s based on a simplification of statistics, but if Family A makes twice what Family B makes, then Family A should be able to handle a higher percentage loan than Family B, since they could cut their non-house expenses further than Family B if needed.

Or maybe I’m just in the minority where costs are negotiably decoupled from income…

[beanmaestro]

I appreciate that it’s based on a simplification of statistics, but if Family A makes twice what Family B makes, then Family A should be able to handle a higher percentage loan than Family B, since they could cut their non-house expenses further than Family B if needed.

Or maybe I’m just in the minority where costs are negotiably decoupled from income…

[beanmaestro]

I appreciate that it’s based on a simplification of statistics, but if Family A makes twice what Family B makes, then Family A should be able to handle a higher percentage loan than Family B, since they could cut their non-house expenses further than Family B if needed.

Or maybe I’m just in the minority where costs are negotiably decoupled from income…

[beanmaestro]

I appreciate that it’s based on a simplification of statistics, but if Family A makes twice what Family B makes, then Family A should be able to handle a higher percentage loan than Family B, since they could cut their non-house expenses further than Family B if needed.

Or maybe I’m just in the minority where costs are negotiably decoupled from income…

[Arraya]

Fannie’s defaults have gone parabolic, it’s about time.

[Arraya]

Fannie’s defaults have gone parabolic, it’s about time.

[Arraya]

Fannie’s defaults have gone parabolic, it’s about time.

[Arraya]

Fannie’s defaults have gone parabolic, it’s about time.

[Author]

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