Thursday, April 03, 2008

Crazy

When we bought our "brand new car" (that is what Evan insists on calling it) last month we did the financing through the dealer. They applied to several loans and finalized the one with the best rates. One of the places they applied to was Bank of America, which then turned us down despite our exceptional credit ratings (think mid to high 700s). My credit rating was lower than my husband's (by a mere 20 points) and that was the basis for the refusal. Confused we scratched our heads and moved on with life.

Fast forward to this week. We are now getting pre approved for a mortgage. The place we are going to for this is willing to let us take out a $200,000 loan easily*. I find it amusing that we can get that rather large sum of money and yet one particular bank would not lend us a much lower amount based on a few piddly point differences. It was not like I had even had a bankruptcy or anything. My husband and I have been careful to try and make sure that there is ample credit building opportunities for the both of us. When we first got married I actually had better credit than him and at one point all our utilities had to be in my name so that we did not have to pay a massive deposit. The world of credit and loans is a very odd place.

* We are wise enough to not take them up on that massive loan. Sadly, in our current residence that loan would not get us much of anything. In Kansas that would get us a pretty hefty house if we were careful about it (new homes there seem to cost a lot more than an equal older home).

7 comments:

chelle said...

Credit is an odd thing. We qualify for much more than we can afford right now too. It is hard not to go for the gold so to speak.

I am glad houseing markets are nicer where you are headed. California is crazy!

Amber said...

The world of credit and loans is a SCARY place! My husband and I obsessed for months before we bought our house, tossing numbers around making sure we weren't getting in over our heads. Fortunately, our figurin' was on target!

Don Mills Diva said...

I will never figure out how they qualify people. It seems like they are so strict with the weirdest things and then they turn around and offer you a credit card a day every day!

*Michelle* said...

The reason is that car loans have a higher default rate than mortgages (or at least they do traditionally!). Because of that, banks are stingier with money for cars than for houses.

Tama said...

I have worked in banking for many years and I still don't understand the whole credit approval thing. I can get a $9,000 line of credit, but my husband can't and his credit score is higher than mine. I really don't think that there is a rhyme or reason to any of it.

Nancy said...

There has been a shocking lack of pictures of my grankids on your blog lately. I had to dream about them last night to see them.

Ami said...

Hi Nancy. LOL My mom doesn't get any grandkid pictures on her daughter's website.

Anyway, I was going to say that I'm always really surprised at how much they're willing to loan us for a house too. I guess they think it is okay if we eat dogfood as long as we make the payments. And that's not counting other important things we have in our budget. I think that is one of the reasons there is a homeowner's crisis. Yes, the homeowners should have been more cautious but a lot of people trust the banks won't let them get too far under, and so will take the terms offered.