theprof00 said: @squirrel I am basically providing the subtext behind the entire sub-prime lending practices. Banks are given permission to do whatever they want as long as the customer signs the contract (even without reading it or being informed) |
Being able to afford a home is quite a bit different from being able to convince a bank to give you a mortgage ... The long standing guideline I have heard several times for what someone can afford for a mortgage is whatever you can get on a 5 year fixed mortgage spending less than 35% of your take home income amortized over 15 years; even though people can qualify using 50% of their take home income on a variable rate mortgage that is amortized over 50 years this does not mean they can afford their mortgage.
The housing market began its decline because no one who could afford a starter home wanted to buy a starter home, and it began to make far more sense to rent than to buy in most markets.