What's wrong with this picture?

jac- I got my head bitten off for suggesting that when someone doesn't have large reserves, they shouldn't be buying a house! I guess for some people, if you qualify, that's all that matters. If you are not comfortable with that $1000/month for all your incidentals, adjust your price range accordingly.

We look at groos income- we do not take into account any expenses like utilities, cell phones, fuel... So, you can see how lending standards have some serious catching up to do! Rock on for recognizing it!

Hey, everyones doing it. lol  Go for it.... jk

And don't forget health insurance, 401K contributions, disability insurance that comes out of paycheck before we get anything.

The difference between our net and gross is huge and the calculations on what we "could afford" is quite different between the net and gross.   Yes, we too were "approved" for a loan that essentially left us with little or no money to live on, butlike Jennifer said they don't take anything into consideration.   If you look at things we pay for today that we didn't 20 years ago (cable, cell phone, internet.....can totall ove $200.00 a month easily) and based on inflation and wages, we have less and les to spend.

I spoke to a friend today and her take on the economy was that she felt blessed that with all the hikes in costs she is able to maintain the same level of living as before, meanwhile all around there are families having to sell the house, the car, or other stuff to float the boat and plug the hole in the hull.  If you were on the brink before you are basically being tipped over hte edge today.

After paying the mortgage every month, we would have a whopping $1000 month to pay for everything else!

At what point in your life are you going to realize you didnt purchase a home, 

What you did was pay (or promise to pay ) for the the sellers retirement.

Your prices in your region are like many other places are disconnected from fundementals

like income, rentals, and historical trends.    You been pimped!

Paying for their retirement...there are a lot of baby boomers praying for just that, what will they do when they can't afford the high taxes on their houses and can't sell them for outrageous prices anymore and parlay that sale into another purchase, oh the horror.  

No one forced anyone to sign on the dotted line.  How is a lender supposed to qualify you on hmmm, how much is the price of gas today  How many gallons is their vehicle?  What about food for the table, how much is that porterhouse t-bone they are eating.  There is no way to determine that when you buy a house.  Unfortunately, maybe you will have to cut down on cell phone usage or cut out that extra drive on the weekend, just until you get back to work.  

There is no simple answer.

We would never buy until prices dropped a whole lot.  Never. I think husband just was curious. But we really do like the house. Oh well, we'll find a house just as nice one when the time is right.  I think we need to stay off realtor.com and stop going to open houses.It's hard sometimes not to just say "I want it now, were do I sign!"  But we wouldn't do that.   We read these boards. So to quote Flavor Flav. I know what time it is.       PS    Husband told me to erase the Flavor Flav quote. I told him to talk to the hand. He just told me that talk to the hand is so old. I tell him its retro now, Biyatch!

Tammy, are you really too stupid to see that what jaccceee is saying is an indictment against your industry, not a complaint that she's only got $1K left over if she buys?  She clearly would not buy if that were the case.  She has different and smarter plans.  Geez.

Oh that is so weak Tammy.  

Food

Gas

Car payment, insurance for the cars

Life insurance (a must for those with kids)

Utilities

retirement savings

general savings

clothing for family

entertainment

any consumer debt like credit cards

Sure, some of these are negotiable and if you choose to live without them then so be it, but there are few people in this country that will or can do that.  When I bought my house 6 years ago we paid more than 40% of our income (net) toward our house payment........we had only one car payment and no debt so it was manageable, but in that time we put no money in savings and took no vacations....not sure owning a home and having no quality of life made ownership worth it. I look back and see that it was a stupid move, though we sold it and got out of that financial pitfall.  By putting someone into a home that usurps so much of their income you determine their financial instability, you give them hope that they can own a home, yet they can't afford to repair it since they have no money for it unless they take on extra jobs.  Your pathetic. 

Good for you jaccceee to see past it and wait.  Has anyone tried to hussle you with the buy now or be priced out, you would be crazy to miss this deal, or the best I have ever heard from someone in the industry........YOU WILL ALWAYS MAKE MORE MONEY IN THE FUTURE.......holy cow these people need to be burned at the stake for what they do, cause there are many ignorant people who fall for this bull crap and get sucked into these perilous situations.  

Tsk tsk Tammy

3GirlsVA, Maybe not hussle but pushy.  2 realtors  called last night saying both of them were the listing agent. .   Their mortgage friend called husband today to give us the good news.

Space-acer, I would never "be pimped". I have you to protect me.

I am not going to justify my business with those of you who do not even know what you are talking about.  As for 3girls, we need not be burned at the stakes.  at least not me, what you quoted above is something that has NEVER come out of my mouth, nor would it.  So very sorry you were done wrong by a lender.  Research them next time!

If lenders changed the guidelines a tad, that would go a LONG way... 50% of GROSS income is outrageous, and yet loans were handed out in those situations. While we are not psychic, and didn't see the rising fuel prices, etc... I think we should have said to our clients 'what are you comfortable with'. For the record, I did. Often. And I have to say I don't think I have a single default on my record. (knock on WOOD) Usually there is a LARGE discrepancy between what they qualify for, and what they want to pay. We don't know spending and saving habits- so it is not a science, but come on! 3girls- right on. Unfortunately, most people say 'what savings?' 

true, changing the guidelines is needed.  I think 50% of take home woudl be better, but hey, not a lender, just a broker.   BUT, what they are is what they are right now.  Most of my lenders will not touch the loan unless there are substantial reserves, some as much as 6 months PITI.  How you spend it, is how you spend it, if you deplete it, how is it any of my fault, did I make your loan go into foreclosre?  Dont think so. 

I doubt asking clients what they are comfortable with will resolve the situation, for every one who says this amount, there are 10 others who say an amount FAR more than what they are truly comfortable with.

Common Sense 101, For lots of people the American Dream has become the American Nightmare. When a deal goes bad usually the whole industry is at fault including the Buyers and Sellers. Anyway on the positive side Real Estate is still a great long term investment. And remember all you bargain hunters you get what you pay for - so if a loan seems cheap at the beginning it probably will be profitable for the bank, real estate agent  and mortgage broker in the end. That's why personal referrals  have a higher probability of the consumer not getting ripped off. Remember Buyers when you can only afford a Honda don't buy the Mercedes.

Much of the reason you got the reaction you did is your condescending attitude, Tammy.  Go back and read your first post.  jaccceee hardly needed you to tell her to cut her cell phone usage.  As if that would even make a difference in what size loan she could handle!!!  Actually, it looks like the problem is that you are greedy, condescending, and stupid all rolled into one.

Relax Tammy, I never quoted you or made you say that you were absolved from any neglegence for anyone that gets into a situation where their mortage is really in reality too much of their monthly earnings. 

You wrote it Tammy so own it "No one forced anyone to sign on the dotted line. How is a lender supposed to qualify you on hmmm, how much is the price of gas today How many gallons is their vehicle? What about food for the table, how much is that porterhouse t-bone they are eating. There is no way to determine that when you buy a house. Unfortunately, maybe you will have to cut down on cell phone usage or cut out that extra drive on the weekend, just until you get back to work."   Dang, she used the whole no body held a gun to their heads argument....does this allow someone in the industry to tell someone who has never had much, never thought they could ever own a home that they can, you give them all these dreams and you probably never ask your clients to sit down and figure out what they pay for EVERYTHING and if they think they can still afford the mortgage.    I am not saying home ownership for me was ever a negative thing per se, but I am not disillusioned by it anymore. 

This isn't always about someone wanting the Mercedes on a Honda budget.........I know many who took on the interest only loans when they could have gotten a conventional loan and qualified.....they were told to go for the lower monthly payment and use the difference to make cosmetic changes to the home........YES, my ex-neighbor was told that!!!   Great advice don't you think, and she listened to the EXPERTS......OMG! 

Sunshineday-condescending was spot on, even in black and white you can feel it.

Amen Bette....and still they sell themselves as such, I mean read what she and then the REA wrote.  I was one of those that would defer to them thinking that they knew their biz, but as I educate myself more about real estate and lending the more I see the sham it all is. 

They write what they write cause they need to try and convince people that buying now is good, there are plenty of loan packages, on and on totally ignoring that home prices are INFLATED and not aligned with INCOMES.  

I know there are some REAs who say they don't deal with people trying to buy a home with suicide loans, but come on, only 1 REA and lender is not responsible for the millions of people in these homes and loans.....there are plenty of people who probably if they took an HONEST look at themselves they can admit that they knew someone was in over their head but what the heck you got paid. 

Lenders pushed 100% ARMs for 20X earnings. They knew that 90% of these people would default, but hey...the gravy train was rollin.  Now that train has hit a spike and jumped the tracks.

Hey, how about this idea:  for every bad loan that ends up in default due to unaffordability of the loan product upon origination (upon investigation of course) the person responsible for approving the loan needs to pay back their commission.   That would keep them in check eh.

Sounds like a good idea 3G.

Jacee... it was MORE REDICULOUS during the peak. They were willing to loan us, on a single income, enough that we had $100 (not a mistype) left over for food, gas, bills, etc. Then they tried to tell us we could still get the loan for that amount if we did an interest only loan...

WHAT??!!! How the heck do you ever pay off a loan with that type?

Needless to say, we did NOT buy until now... and we did NOT let them loan us to our preapproval amount. Makes one wonder who has more common sense, the banks, or the people, huh? And it really makes one wonder why we would EVER trust a bank with our money, huh?

"They were willing to loan us, on a single income, enough that we had $100 (not a mistype) left over for food, gas, bills, etc."

Debts,  I'm laughing at this but I really feel like crying. 

But how can this still be happening? I can understand Tammy's "No one forced you"   but what about the bank, the shareholders. No one is forcing them. They think it's a good idea to loan me that kind of money. Is it really a good business decision? It just seems so risky.   I feel like I'm missing part of the puzzle?  If I was running the bank, I wouldn't  give out a loan like that. But what do I know, I've been fired from like every job I've ever had.

Hey Debts: did they try and sell you the hardcover book "how to live on $100.00 a month"   just jking :-) 

I have to back the Lender's on this.  They are not forcing anybody to sign on the dotted line.  It works both ways.  If a lender is willing to put a bad loan out there and someone is willing to take it, then let what may be, happen.  Everyone needs to look in the mirror and make the decision for themselves.

I've told many a client to not buy, because it was reaching, but not every person listens, and I'm not always right.