Buy Now, Pay Later

In the State of NY, lenders can base the amount of your loan off of your potential future earnings. In doing this, they limit their exposure to making bad loans and can generate new business even during a market slowdown.

Your potential future earnings might affect the amount of loan you are approved for, according to president of the New York Mortgage Brokers Association. That's right, it’s not just your current income that will be taken into consideration but how much you might make ten years from now. For some this is a scary thought but for the New York Legislature it seems to be a great idea that will soon become part of New York mortgage law after it is signed into effect by Governor Paterson.

In recent years, due to the sub-prime market, lenders have been providing mortgages to prospective buyers who have poor credit histories and who have less than adequate means of income to repay the loan amount. This new legislation will help lenders reduce the risk of overextending themselves and help buyers reduce the risk or foreclosure. If a mortgage lender can predict your future income they can provide you with better options that could save you a lot of headache in the future.

The downside to this is that it could be construed as discrimination to not provide borrowers with similar incomes and credit scores with loans that do not have similar repayment terms and interest rates. Critics of the legislation argue that basing home loans on potential income could be unpredictable because people change job industries, get married, and have children can all cause financial hardship. Basing a loan of future incomes in just too risky and there are sure to be many unhappy borrowers in the state when this becomes law.