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Why is My Bank Telling Me I Can't Borrow From Myself?

Chris Davis
·4 min read

American real estate equity holds $6.3 trillion worth of value. Unfortunately, banks are disallowing many of the 45 million homeowners to share this equity to access it. The banks claim they are protecting themselves because of the inevitable credit crunch that is coming in the next few months. Are they really? How are they protecting their investments when their clients are losing jobs

What financial institution would actually have the guts to tell you that you can’t access the value in your own home?

As it turns out, most of them. No one has held the traditional financial industry responsible or accountable for anything for a long time. They take Fed money meant for us and give themselves bonuses, vacations and stock buybacks.

But wait! Congress said that they can’t buy back stocks or fire people.

Then how do you explain this?

  • HSBC: 79 branches closed in 2020

  • U.S. Bank: 69 branches closed in 2020

  • Wells Fargo: 63 branches closed in 2020

  • Chase Bank: 58 branches closed in 2020

  • PNC Bank: 56 branches closed in 2020

  • Citizens Financial Bank: 36 branches closed in 2020

As for the stock buybacks, just wait a few years. It’s coming.

Goldman Sachs Chief Executive Lloyd Blankfein

Traditional Bureaucracy

Unless you are a real estate investor, dealing with the financial aspects of your home in any capacity is difficult. Here’s a little secret — banks make it difficult on purpose. If the process of accessing your equity or refinancing was made easy, people might realize that the banks are just a middleman taking fees off the top. They are only necessary because they are the only institutions with the scale to insure property values at a widespread scale.

If you cannot access your equity, then you don’t really own your home. In the traditional world of finance, your “ownership” depends on so much outside of the actual possession of your property. Here are the traditional requirements that traditional finance wants you to have just to borrow money from yourself:

A credit score in the mid 600s: Even though you are responsible enough to have equity in your home, banks still see a sub 600 credit score as a reason to believe you will not pay yourself back.

A debt to income ratio below 43%: In order to borrow from yourself, you need to show that you have little debt compared to your income. To be so financially astute, bankers do not seem to realize the obvious — people usually need to borrow from home equity because they have tapped all other sources.

Sufficient income: Sufficient income is a discretionary term that banks often use to deny loans based on sketchy circumstances. When they find little profit in lending, they tend to raise this requirement so that they can keep the money for themselves.

Reliable payment history: This is another discretionary term that no one has control over outside of the bank. This policy is also skewed towards helping people who don’t need it. In many cases, the reason that people need to borrow is that they are not able to keep up with their payments. Especially in a PANDEMIC.

Bankers can tack on any number of discretionary metrics to shut the door on whomever they please. On top of that, you may also pay more for the privilege of borrowing money when you actually need it. Banks do not even factor in the impact of their queries on your credit score before determining your interest rate. These are queries they initiated, by the way. Why would you want to play in this world if you don’t have to?

Getting Around the Con

Fortunately, we are in an era of new fintech that lets you get around the con of traditional finance. If you need to access your home equity quickly and easily, Haus has you covered.

Haus doesn’t try to scare you into paying higher fees by obfuscating the process. Once you create a Haus account, you get instant access to a calculator that will tell you how much you can cash out and the monthly payment to service the loan. Forget dealing with the bank salesman who is trained to find the most profitable arrangement for the lender. Haus is a co-investor, not a loan officer. Because we share the cost of ownership, you get access to your equity when you want it. After the pandemic passes, we help you grow your equity to come back stronger than ever.

Skip the Bank

Banks are characteristically slow in providing financial assistance to the populace during the COVID pandemic. This is par for the course.

This does not mean you have to suffer, especially if you are literally sitting on a gold mine. Let Haus walk you through your next HELOC for a streamlined, simplified process that gives you more access at a lower cost.

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