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Post by Deleted on Feb 4, 2015 11:27:57 GMT
Does it play a part in the decision of whether to extend credit? What would it mater?
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Post by ScrapsontheRocks on Feb 4, 2015 11:38:39 GMT
It plays a huge part in a lending decision. For a large loan there may be equity in property owned over which a bank (for eg) can register a right to recover. I am not from the USA, but sure this holds true. Owning your own property traditionally also means you are unlikely to upsticks and disappear. This is a gross generalization, of course and there are many renters of excellent financial standing.
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Deleted
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Post by Deleted on Feb 4, 2015 12:23:14 GMT
I think a lot of it has to do with credit history. A mortage is an established credit history that shows you are capable of paying a big bill for a long period of time. There are many landlords that do not report to the credit bureaus that you pay on time regularly. However, your landlord/property manager could give you a reference if one is needed whereas your bank cannot.
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Deleted
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Post by Deleted on Feb 4, 2015 12:35:04 GMT
If you default, and own a house, you have something they can go after. Am I the only one who now loves the word "Upsticks"?  |
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Post by eebud on Feb 4, 2015 12:52:05 GMT
If you default, and own a house, you have something they can go after. Am I the only one who now loves the word "Upsticks"? How true is this? For the majority of home owners, your home cannot be taken even in bankruptcy except by whoever holds the mortgage. I think it does have a small impact on how easily you can disappear If you rent and move frequently, there might be a slight concern over finding you if you default. |
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Deleted
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Post by Deleted on Feb 4, 2015 12:57:09 GMT
When you get a mortgage, you go through a much stricter financial analysis than the simple credit check you go through when renting. I think they're probably piggybacking on that financial check.
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Deleted
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Post by Deleted on Feb 4, 2015 13:17:10 GMT
All these points do make sense. Yesterday for some reason it made me think. I was requesting an increase on Care Credit. They ask me all the questions, and then say, "Ok, one final question: do you rent or own?" I say own, but thought about it later. We own, but do we really? We owe on the house, so the bank owns it until it's paid off. So maybe the question does have more to do with the stricter guidelines for obtaining a mortgage, and feel owners might be less likely to default. And I agree with a pp, "Owning your own property traditionally also means you are unlikely to upsticks and disappear. This is a gross generalization, of course and there are many renters of excellent financial standing." It was just one of those things that made me go, hmmmmmm.  |
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Post by Fidget on Feb 4, 2015 13:49:07 GMT
If you default, and own a house, you have something they can go after. Am I the only one who now loves the word "Upsticks"? I have never heard that word before now. "upsticks" hmmmm.. |
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Post by Dreamsofnyssa on Feb 4, 2015 13:58:39 GMT
I have always wondered about that question.
I always thought it had to do with owning being better than renting (credit wise) but I was once denied a lower insurance rate due to the excuse of having a mortgage. So now I have no idea.
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Deleted
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Post by Deleted on Feb 4, 2015 14:01:11 GMT
I have always wondered about that question. I always thought it had to do with owning being better than renting (credit wise) but I was once denied a lower insurance rate due to the excuse of having a mortgage. So now I have no idea. That's really weird. I wonder why? Maybe we're all wrong... |
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Post by Scrapbrat on Feb 4, 2015 14:11:55 GMT
All these points do make sense. Yesterday for some reason it made me think. I was requesting an increase on Care Credit. They ask me all the questions, and then say, "Ok, one final question: do you rent or own?" I say own, but thought about it later. We own, but do we really? We owe on the house, so the bank owns it until it's paid off. This is a common way to think about mortgages, but it's wrong. Yes, you do own your house, even if you somehow borrowed 100% of the money you used to pay for it. You bought the house with the proceeds from a loan, and yes, your lender has recourse if you don't pay that loan back. But you still OWN the asset. The bank has a first lien on it, but they don't own it. |
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Deleted
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Post by Deleted on Feb 4, 2015 14:49:05 GMT
It's mostly due to properly calculating your debt load. A mortgage will show on your credit bureau, but rent does not.
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Post by Bitchy Rich on Feb 4, 2015 15:14:11 GMT
If you default, and own a house, you have something they can go after. Am I the only one who now loves the word "Upsticks"? I have never heard that word before now. "upsticks" hmmmm.. It's not one word. It's a phrase. "Up sticks" means to pull up stakes, take everything you own and move. |
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tduby1
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Post by tduby1 on Feb 4, 2015 15:43:17 GMT
If you default, and own a house, you have something they can go after. Am I the only one who now loves the word "Upsticks"? How true is this? For the majority of home owners, your home cannot be taken even in bankruptcy except by whoever holds the mortgage. I thunk it does have a small impact on how easily you can disappear If you rent and move frequently, there might be a slight concern over finding you if you default. Yeah, I would think they would need a lien on the house to be able to claim any equity. |
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Post by mrsscrapdiva on Feb 4, 2015 16:21:03 GMT
From my experience working at a large insurance company, a married person that owns a home is more stable than a single person that rents. I guess if you have a college education makes a difference too. Not saying any of this is necessarily true in all instances or circumstances, but it did fall under underwriting guidelines.
I imagine the bank has similar rules.
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Post by Dreamsofnyssa on Feb 4, 2015 22:52:47 GMT
I have always wondered about that question. I always thought it had to do with owning being better than renting (credit wise) but I was once denied a lower insurance rate due to the excuse of having a mortgage. So now I have no idea. That's really weird. I wonder why? Maybe we're all wrong... I have no idea but they also used the excuse that I didn't have a car loan within the past 5-years. So I guess owning a house (and a car) is bad but renting and having to pay for a car loan means I am a good consumer and therefore eligible for all the awesome discounts. |
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Post by red88 on Feb 4, 2015 22:56:43 GMT
It's mostly due to properly calculating your debt load. A mortgage will show on your credit bureau, but rent does not.  |
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georgiapea
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Post by georgiapea on Feb 4, 2015 22:56:56 GMT
I've always felt home ownership spoke of stability. For one thing, having a mtg. would indicate the person was deemed qualified to undertake a house payment for the next 30 years.
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Deleted
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Post by Deleted on Feb 4, 2015 22:59:31 GMT
Owning a home does nothing to improve your credit score, except for a bit of impact on the ~10% of your FICO that's determined by your credit mix - but even there, student loans or other larger dollar term loans can have the exact same impact. Dreamsofnyssa Having no recent term debt can be a negative, as it doesn't show ability to handle similar debt to what you're requesting. Whether or not that's fair or right, it's how it works. Usually that only comes up with a fairly "thin file," meaning overall, not a lot of credit history. |
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Post by Dreamsofnyssa on Feb 4, 2015 23:26:27 GMT
Owning a home does nothing to improve your credit score, except for a bit of impact on the ~10% of your FICO that's determined by your credit mix - but even there, student loans or other larger dollar term loans can have the exact same impact. Dreamsofnyssa Having no recent term debt can be a negative, as it doesn't show ability to handle similar debt to what you're requesting. Whether or not that's fair or right, it's how it works. Usually that only comes up with a fairly "thin file," meaning overall, not a lot of credit history. I have debt. Student loans and credit cards. Just not a car loan which was the specific excuse they used. So basically, even though I have a great driving record and good credit I was denied the best discounts on my insurance because I had a mortgage and didn't have a current car loan. |
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Deleted
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Post by Deleted on Feb 4, 2015 23:31:36 GMT
Whoops, sorry, when you said something about them saying you didn't have a recent car loan, I thought you were talking about getting a new car loan, not insurance discounts. I misunderstood. I working in banking and I understand how we do things. Insurance is a whole different animal and they way they operate is a mystery to me!
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Post by Dori~Mama~Bear on Feb 5, 2015 0:21:42 GMT
and if you don't pay the loan back they can put a lean on your house if you own it. That means you can not sell your house without them getting money from the sale. Some times it stops the sale all together.
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Deleted
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Post by Deleted on Feb 5, 2015 0:32:55 GMT
and if you don't pay the loan back they can put a lean on your house if you own it. That means you can not sell your house without them getting money from the sale. Some times it stops the sale all together. They can't put a lien on for just anything. Mortgage holders can, contractors can (if they have done work on your home and you didn't pay), taxing authorities can. There are other situations where it can happen, but they are limited. It's not like the bank with your car loan or credit card can put a lien on your home if you default. |
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scrapaddie
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Post by scrapaddie on Feb 5, 2015 0:47:23 GMT
If you default, and own a house, you have something they can go after. Am I the only one who now loves the word "Upsticks"? Me too!! It made me smile!! |
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scrapaddie
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Post by scrapaddie on Feb 5, 2015 0:50:06 GMT
Owning a home does nothing to improve your credit score, except for a bit of impact on the ~10% of your FICO that's determined by your credit mix - but even there, student loans or other larger dollar term loans can have the exact same impact. Dreamsofnyssa Having no recent term debt can be a negative, as it doesn't show ability to handle similar debt to what you're requesting. Whether or not that's fair or right, it's how it works. Usually that only comes up with a fairly "thin file," meaning overall, not a lot of credit history. I have debt. Student loans and credit cards. Just not a car loan which was the specific excuse they used. So basically, even though I have a great driving record and good credit I was denied the best discounts on my insurance because I had a mortgage and didn't have a current car loan. I own my car and my house with no loans. I I pay my credit cards off in total every month. I was told that I can improve my credit score if I had a mortgage! |
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