The Smooth Loan Process #2010-23 (Birthday Edition)

1973 or 2010? The 70's Are Back In Style

It's the day of my birth! It happened in 1973. At least, that's what they tell me. I don't really remember it. Here are some other fun facts (according to the internet) about 1973. The average home price in the US was $32,500. The average annual household income was $12,900 and 30 Year mortgage rates were about 7.5%. The most fun of all, a gallon of gas was 40 cents and 94% of all people over 18 smoked cigarettes. Okay, I made up the last one about smoking, but it was a lot.

Oh, how things have changed. How sweet would it be today to have a $228 house payment on your $32,500 mortgage? Or fill up your car for $8.00? One thing that has changed since the 70's but has now come back in style is the way we qualify for our mortgages.

My dad remembers the home buying process for our family home in the 70's. He still lives there, by the way. He had to provide two years W-2's and tax returns, one months pay stubs and two months bank statements. His monthly debts could not exceed 41% of his gross monthly income. And he had to have had a history of paying his bills on time.

Sound familiar? If you said yes, you're right. These are essentially the guidelines today to qualify for a mortgage. If we look back at 1973, the foreclosure rate for all mortgages under these guidelines was about .5%. We hear in the news how difficult it is now to obtain financing. It's not that it's difficult, it's just back to how it used to be. Maybe that's not a bad thing. Is it unreasonable that we are expected to have the ability to repay the money that we borrow?

The Smooth Loan Process lesson for today: Your lender is going to ask you for more paperwork than they did a few years ago. Please don't be offended.

Bonus Lesson: The Sting was Best Picture of 1973. Avatar is the favorite this year. Avatar had better special effects.

Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com