“(All loans) still use debt ratios, took your biggest component: not pay their rents, affecting
but it always requires a certain rent or house payment. You investment property owners.
amount of difference between turned and moved that to your takehome pay and your where it's fixed.”
mortgage payment. You have
“The great recession was the
fact that the lending industry
to have a certain level of “Whereas renters by and large, figured that everybody who
disposable income, and it gets depending on what market claims they can drive a
bigger if the family size is you're in, your rents are Lamborghini has the right to
larger. Somebody with five generally going to edge up a drive a Lamborghini. It didn't
kids, you know, I hate to say it, bit every single year. So, work out, and now there are
has a bit more disposable taking that hard step the first people who say, ‘Why doesn't
income than a single veteran year for firsttime home buyers my 800 credit score get me a
(or civilian) does.” is not a problem.” loan?’ Well, because of tens of
thousands of other people with
“To me, a two percent debtto The same four tests of lending 800 credit scores proved that
income ratio means you can't apply to investors, but if things go bad, they don't
buy the house. I think you guidelines are now especially want to be responsible for
should have a different tighter than with individual what they signed for,” Ryan
conversation with your real home buyers. According to said.
estate professional, and just Ryan, a number of investors buy a little bit smaller house.” defaulted on their mortgages Despite such issues, Ryan
during the great recession and says for many of his clients’
“Now, the beauty (for all said, "Oh, I can't rent my credit scores are not as much
borrowers) is with a fixedrate property out. It's under water. I of a factor as many people
loan. Most of these people are don't want it anymore." believe. He has worked with
wage earners. Next year you
clients with credit scores as
get a couple percent increase Ryan said many individuals low as 520—even for nonVA
in your income, and almost and investors during the gogo loans.
100 percent of that goes years had good intentions, but toward your disposable the recession caused many “So, that's a myth in the
income, because property people to lose their jobs. Thus, marketplace that you have to
taxes and insurance don't go they could not make their have a 700 credit score. Low
up that much. Utilities don't go mortgage payments. Another credit scores have solutions.
up that much. Because you factor is some people could That really has not changed,”
have a fixedrate loan, you just
Ryan said.
Meet Mortgage Broker: Michael Ryan
Bay Area Finance Professional Discover The Sweet Taste of Success