A Short Excerpt From "What Consumers Need To Know About Mortgages"

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The first thing to understand is that the entire machine of loans is completely impersonal. I don't mean that you're necessarily just one more cog in the machine to your loan officer, as I can't remember encountering a loan officer who thought like that. But the mechanisms of whether your loan in particular is approved have precisely zero to do with whether you're a good or virtuous person, whether you deserve a chance, or anything other than how well you fit the profile of someone who can repay this loan. Understand that. Your bank doesn't give a damn if you're black, white, brown, red, yellow, or pink with purple polka dots. They care about green - money. They don't care whether you're a man or a woman, what your sexual orientation is, or anything else. They make their decisions based upon how well you fit the profile of someone who can repay the loan. How much you make, how stable that income is, how much of that income is obligated to other payments, how well you manage credit and a host of other factors. Except as I will note later, they don't care how much equity is in the property. Banks are not in the business of owning property, and they lose money when they have to foreclose no matter how much equity is in the property. They're in the loan business. They care about whether you fit the profile of someone who will repay that loan. Not having enough equity for the loan guidelines will lose you a loan, but having more won't get your loan approved. In the course of funding well over a thousand loans from dozens of lenders, I have never seen or heard race, ethnicity, sex, or orientation of the applicants mentioned in any sort of communication other than by government mandate for gathering the information. If it weren't required by the government on a mandated government form, I have precisely zero evidence that anyone at any lender I have ever submitted a loan to cares. What they want to know is whether you fit the profile of someone who will repay that loan.

How do you fit the profile? Earn a steady income from a consistent source. Save enough for a down payment that fits the underwriting profile, which varies from zero to twenty percent or so. Manage your credit well. Make your payments on time. Don't try to borrow more than you can afford to repay. Be able to document everything. I'll go over all of this in considerable detail later in the book, but the criteria are all financial. The rest doesn't matter. The banks don't care if you're Democrat or Republican, statist or anarchist, or which way you put your toilet paper rolls in the bathroom dispenser.

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This page contains a single entry by Dan Melson published on January 20, 2015 12:47 PM.

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