Affluent Black County Mired In Mortgage Mess

[DrPhil]

Originally Posted by BluPhire

(I only say that because of the mentality of many upper socio, other times they are upper by salary and not upper by wealth so do we really consider them upper?).

Technically, no.

Socioeconomic status and social class rankings are based on qualitative economic distinctions of the source of the income rather than the amount of the income.

If someone has no wealth and their income is only based on salary--meaning, if they went jobless, they'd immediately be shit out of luck--their membership in the upper class club is fleeting.

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Also, if someone has a salary of $150K before taxes and debts of $140K, especially with no wealth accumulation, their debt-income ratio is comparable to someone with a salary of $40K. If the $40K salary is matched with a debt of $10K, the debt-income ratio can be better than the $150K person.

On that note, a lot of people with $150K salaries would not qualify for certain 30 year fixed rate mortgages based on their payment-to-income-ratio. They would have to get a different type of mortgage loan (like the dangerous ARMs) and some (more considerate) lenders would either advise them to get a cheaper house or wait until their debt has lessened.

[Boodleboy322]

Originally Posted by DrPhil

Technically, no.

They would have to get a different type of mortgage loan (like the dangerous ARMs) and some (more considerate) lenders would either advise them to get a cheaper house or wait until their debt has lessened.

Credit Score is a huge factor in the origination process and ARMs have stricter underwriting guidelines than a standard 30yr Fixed Rate Mortgage. The days of going into these "Dangerous ARMs" got shut down during the Subprime meltdown. Specifically, Hybrid Option ARMs. Indeed they were dangerous when sold to the wrong client. But they haven't been actively trading in the Market for several years now.

[DrPhil]

Originally Posted by Boodleboy322

The days of going into these "Dangerous ARMs" got shut down during the Subprime meltdown. Specifically, Hybrid Option ARMs...But they haven't been actively trading in the Market for several years now.

What do you mean? I'm not the most familiar with Hybrid Option ARMs, but the issue with ARMs hasn't gone away. In 2011, there are still homebuyers who are opting to do a 1, 2, 5, or 7 year ARM despite being warned by mortgage lenders and anyone else who knows the potential dangers.