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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (70871)	10/3/2006 7:23:05 PM
From: benwood	Read Replies (1) \| Respond to of 110194

Except if you could have gotten a mortgage at 75% of your income, houses would have been three times more expensive, because everybody else would have been doing it. Like now...

To: Lizzie Tudor who wrote (70871)	10/3/2006 9:05:40 PM
From: Wyätt Gwyön	Respond to of 110194

its just that I remember when I was trying to buy a house in the early 90s with a high income i was in the same situation as you, except a little younger, when i tried to buy my first house in the early 90s. i was in a worse spot than most people since i was self-employed and they (the underwriters) just averaged my last 24 months of income to determine my income. this i considered unfair since i hadn't even been working 24 months (so they included a few zero dollar months in the average). the upshot was they only gave me an 84K loan (80% LTV) when i was making 10K a month as a 25yr-old. it was frustrating for me, too, since if they'd been willing to lend me even 110K (less than my annual wages on the run rate), i'd have been able to buy a lot more house. that house i bought for 104K. i moved after a couple years, but now it is probably a 400K house. what has improved so much that it is worth 4 times as much? the main thing is, credit's a lot easier to get. any corpse with a pulse can borrow 400K today. so ironically, a house which was easy to afford for me under stringent (really unfair) credit requirements would now be a stretch for somebody to afford on the same income. that's why people who make a lot of money should actually hope for the opposite of what you suggest. they should pray for stringent lending requirements. 20% DTI would cut the prices of houses by 70%. that'd be great for people with no debt and high incomes. it took me a few years to come to that perspective. i think it happened when i no longer had any debt and came to see the other side of the coin.