Home News I Have an 808 Credit Score but It Took 3 Tries to Refinance My House

I Have an 808 Credit Score but It Took 3 Tries to Refinance My House

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  • I bought a house in 2021, when mortgage rates were at historically low levels, but I was given a 7.5% interest rate.
  • Refinancing was even more difficult despite my excellent credit score and financial profile. I was rejected twice.
  • I finally went to a brokerage firm with more diverse staff and refinanced my house, but I shouldn’t.

If you are one of those people who think color people are exaggerating when they say Can’t get a decent bank loanI’m here to tell you: as an almost perfect black consumer

Credit score

Economic discrimination is real.

Earlier this year, I set out to refinance my Atlanta home mortgage. When I bought this house in 2021, I received a very high interest rate (7.5% if the market interest rate is 2%), probably because I am an entrepreneur.

My closing lawyer at the time said this was one of the highest interest rates I’ve ever seen for a buyer with my profile.I have an 808 credit score, low Debt-to-earning ratio, And sound cash reserves. With traditional lending standards, I should have been able to get the highest interest rate on the loan without any problems.

I told the closing lawyer that 7.5% was predatory, but that was the only condition I could get, so I Refinancing a loan later. There was little discrimination when refinancing, and I thought it would be better to deal with it temporarily.

Compare interest rates on personal loans

I had a terrible time trying to refinance

The boy was wrong with me. Discrimination during the refinancing process was exacerbated.it took three Trying to get approval — Despite my strong finances, home equity has increased by 30% in less than a year.

The first lender denied me when I learned that I had a PPP loan for my business, like thousands of companies during a pandemic. The loan was allowed, but the mortgage lender said the fact that I had this loan in the first place was a sign of poor business management.I immediately wondered Los Angeles Lakers Also Harvard They were rejected for a loan because of the PPP money they received. We both know the answer.

The second lender denied me after considering the additional income I would earn to become a thinking leader. This includes engagement speeches, acting in television commercials, and winning fellowships. The company decided that the risk was too high because the values ​​were not the same every month. As a reminder, my main source of income was sufficient for approval. However, the underwriter said he was worried that I had an additional source of income.

Conversations with retired underwriters made me change course

At this point, I was frustrated and discouraged. I am familiar with racial and gender prejudices in the financial industry, and how discriminatory policies are written into the system.I am fighting this prejudice every day EnrichHERI founded in 2019, is a fintech platform that gives women and people-led companies access to capital easily and affordably.

But this current battle was particularly insulting, given how much time I spent trying to make sure my finances exceeded the basic mortgage requirements. I decided to consult with a retired underwriter who happened to be black. She told me she never denied someone like me throughout her career.

Underwriting a mortgage

industry. She also told me that I had to decide whether I would win the discrimination or accept to keep trying to find an institution that would fund someone who looked like me.

After that conversation, I got some good advice from my clients and started looking for a lending company with a diverse staff (which wasn’t in the previous company).An organization with employees that reflects the community they serve Probability is high Have a fair and impartial underwriting policy.

I was introduced to several lenders with a very diverse team. This time I told the owner of the brokerage why the first two institutions rejected me, but he immediately told me that neither of those facts was a problem. Immediately after reviewing my application, this third and last company set a deadline three weeks later.

My experience was not unique

This experience was annoying, but sadly it’s not isolated.For decades, US banks have been RedliningRefuses mortgages to black and Latin families living in certain areas.When it comes to business lending, mostly white neighborhoods are about on average Twice as much as a loan for small businesses Per capita compared to black neighborhoods.Annual number of US Small Business Administration (SBA) loans to black businesses Decreased 84% since before the 2008 financial crisis.

Redlining was outlawed by the Civil Rights Act of 1968 and the Equal Credit Opportunity Act of 1974, but that practice still exists today.According to the New York Times report, 75% of the first round of government paycheck protection program (PPP) loans in 2020 Majority Enterprises-White Census Zone..4 nationwide

Largest bank

—City, Bank of America, JP Morgan, Wells Fargo— 91% less SBA 7 (a) will finance black-owned businesses in 2019 rather than 2007.

These illegal activities have had devastating consequences for society and have put families in poverty for generations. Imagine how economically strong-colored communities there were today if they were able to establish themselves in business and real estate decades ago.

Three steps to take before making a big financial move

Still, there are steps you can take to empower yourself before embarking on a financial process:

  • Do your research: Learn about how loans work, current interest rates, required documentation, and the various loan products available. Shop and compare offers from different lenders. Find as much information as you can and take the time. Don’t rush the process!
  • Know your credit history: This is very important!your Credit score It greatly affects your ability to get a loan. If you know that your reports have problems, handle them first, if possible. You can apply for a loan no matter what your credit score is, but understand that the terms and fees may not be affordable.
  • Prefer the platforms and companies you want to win: It’s not just traditional banks playing games in town. In the field of financial technology (or “fintech”), there are many companies, such as EnrichHER, that cater to poorly serviced consumers. These companies offer everything from online banking to lending to payroll processing and are often intended to impact the community.

If you feel discriminated against, you have the right to take legal action.Resources such as Legal Service Corporation When LawHelp.org You can help find a civil rights lawyer in your area that will help you gain justice. You can also file a complaint against the problematic company. Consumer Finance BureauA federal agency that enforces consumer finance law.

Frankly, we need to do more with racism and discrimination in the financial sector. I’m trying to play my part as an advocate of financial inclusion, but that’s not enough. Change happens as diverse consumers begin to invest resources in financial institutions that work on the financial well-being of their communities.

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