It's the 690 score. They didn't bother to look at anything else.
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can't get a loan from banks
- Thread starter Sky123987
- Start date
Quote from wave:
LOL, they haven't. Thus the 700 billion package. Where you been?
These are new times friend, new times. Everyone forgot to to their what-if and now paying the piper. Now banks are calculating their what-ifs.
my friend you are not undestanding something. Read this again and again until you get it. and Geez quit being so stubborn, there no shame here on elitetrader!
IT'S 25%!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
I HAVE NO MORTAGE
I HAVE MADE 100K+ EVERY YEAR.
WHERE IS THE RISK???????????????
House today worth $500,000.
25% equity line = $125,000
Housing reverts the same amount it appreciated 46%.
$500,000 - $270,000 = $230,000 new value
$230,000 - $125,000 = $105,000
$105,000 - costs of defaulting = risk or loss
$125,000 IOU / $270,000 loss = 46%
Problem is housing prices have to come down a significant amount before banks take on loans again.
They want a margin of safety and frankley they don't see it yet.
25% equity line = $125,000
Housing reverts the same amount it appreciated 46%.
$500,000 - $270,000 = $230,000 new value
$230,000 - $125,000 = $105,000
$105,000 - costs of defaulting = risk or loss
$125,000 IOU / $270,000 loss = 46%
Problem is housing prices have to come down a significant amount before banks take on loans again.
They want a margin of safety and frankley they don't see it yet.
Quote from wave:
LOL, they haven't. Thus the 700 billion package. Where you been?
LOL the package isn't for bank to make easier loans, it's to unload the worthless derivative paper onto the taxpayer.
But your overall point stands, the OP is having a real problem accepting that Chase won't qualify due to stricter lending standards. That's nothing, I've run into true absurdity in 2007 due to this, and it was not even about credit line but forward agreements.
Adding fuel to the fire is the fact that the MGICs (insurers) are being decimated because of the number of defaults coming due and having to pay the lenders if the borrowers default and lender forecloses. So even if Chase or Wells wanted to do the loan, they can't because they can't hedge it as easy as they once could. Just like the Credit Default Swaps market. MGIC cannot afford anymore defaults so they aren't even insuring anything that smells risky thus leaving the lenders with no suitable hedges in place should the housing market crumble even more which it will.
A while ago I read something on one of the personal finance blogs regarding credit scores and it discussed how credit scores are skewed against the wealthy at times.
Argument being, that those who have solid finances have little need for credit. This may actually lower their credit score. The article went further and described how those who have the best credit scores are those "credit junkies" who are running multiple debt lines and continually utilize them, essentially taking a high income and spending it all on debt service. They argued that a high FICO score might select for that kind of individual, and punish one who may be more financially responsible, having greater assets and less debt.
Makes sense if you consider conventional advice on how to improve your credit score - never close a line, etc...
Finally, to the OP - why would you want to encumber an asset you own free and clear? For a lender to foreclose on a home with 75% equity would be their wet dream. Are you so confident in your financial situation?
And as usual, I am not a financial advisor, I do not hold myself out to be one, you are hereby advised to discuss any questions with your financial, tax, and legal advisors as they pertain to your specific situation. For entertainment purposes only. DYODD.
Argument being, that those who have solid finances have little need for credit. This may actually lower their credit score. The article went further and described how those who have the best credit scores are those "credit junkies" who are running multiple debt lines and continually utilize them, essentially taking a high income and spending it all on debt service. They argued that a high FICO score might select for that kind of individual, and punish one who may be more financially responsible, having greater assets and less debt.
Makes sense if you consider conventional advice on how to improve your credit score - never close a line, etc...
Finally, to the OP - why would you want to encumber an asset you own free and clear? For a lender to foreclose on a home with 75% equity would be their wet dream. Are you so confident in your financial situation?
And as usual, I am not a financial advisor, I do not hold myself out to be one, you are hereby advised to discuss any questions with your financial, tax, and legal advisors as they pertain to your specific situation. For entertainment purposes only. DYODD.
Quote from BondTrader50:
It's the 690 score. They didn't bother to look at anything else.
Exactly...Everyone seems to have great theories but they all miss the point... A 690 is considered poor credit quality. Everyone has rolled back their standards to the good old days when banks only loaned money to credit worthy people. 690 just doesn't cut it.
And, btw, the bank has no interest in your house as collateral. They have enough of them already so the idea they might get lucky and steal your house lacks appeal right now.
dude, 690 is not that good! (mine is ~800) Fergetabout borrowing, get a job. PLus, lending now is tighter than a nuns pussy...
Quote from Sky123987:
I just applied to get a line of credit from 2 banks.
I have a credit score of 690.
I have 0 debt
I have a house completely paid off in cash
I have tax returns for the last 3 years of 100k +
Chase & some other bank I've never heard of declined me WOW!