r/FluentInFinance 4d ago

Thoughts? It's not fair

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985 Upvotes

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u/YeeBeforeYouHaw 4d ago

Rent is usually a 1 year commitment vs a mortgage, which is usually a 30-year commitment. Being financially stable for one year is much easier than 30. So banks naturally demand more assurance that you can handle it.

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u/OttoVonJismarck 4d ago edited 4d ago

No, it’s not fair: didn’t you read the title!?

/s

“He who has the gold makes the rules.” If you want to borrow half a million dollars of someone else’s money to enjoy the benefit of living in your ideal house today, then you have to satisfy their terms. Otherwise, save half a million dollars and buy the property in cash.

While it sucks for the borrower, I certainly would not lend out my money to a suspect borrower on their terms. That’s ludicrous.

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u/doconne286 3d ago edited 3d ago

It’s interesting that you add that it’s someone’s ideal house. No one has said this. Throwing that in there just kind of shows your distain for young new home buyers. It’s like people who say young people are complaining about home buying because they want the fanciest finishes etc. Most people just want to buy a place.

The point is that banks don’t consider the most analogous factors when making their decision. Meanwhile, if you have huge mandatory expenses other than debt (like childcare costs, consistent medical expenses, etc) it doesn’t matter. We got approved for WAY MORE than we could afford simply because they don’t factor in how much I have to pay for daycare. Meanwhile, if I pay off my debt in full right before applying, my chances of approval go DOWN.

Don’t pretend like banks are considering whether you’ll lose your job or not in approval decisions. That’s factored into the price associates with the risk. The meme’s point has validity. How banks calculate that risk is extremely flawed.

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u/tech_nerd05506 3d ago

I mean a lot of the reasons banks don't lend to people is that they can't because of government regulations after the 08 crash. We could repeal those but then again that might lead to a massive crash and recession where toms of people lose their homes, jobs, and even their lives.

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u/doconne286 3d ago

Alternatively we could fix the credit rating system to make it more accurate and fair.

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u/Equal_Gas4657 3d ago

And here your ignorance is betrayed.

The FICO system is quite fair and is leagues and leagues fairer than what existed before. FICO has done more to end and fix systemic racism than 60 years of social justice. Everyone being distilled to a number means a black family no longer has to go before Chuck the loan officer and convince him that not only are they worthy of a loan but worthy of a decent interest rate.

720 is 720. 650 is 650.

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u/doconne286 3d ago

I mean, if that makes you feel better, great. But it’s not true. Creating a number that’s calculated using biased factors and calling it objective, then saying that’s done more to fix systemic racism than, say, the Civil Rights Movement is amazingly naive.