Knowing How to Feel Good about Your Mortgage
Posted September 23, 2018 in Real Estate Trends
Typically, when applicants complete a mortgage application, the applicant and the lender try to make the mortgage happen.
Most recently, the country stopped to ponder the event or crash that happened ten years ago causing many homes to be worth less that what was owed. Many of us have opinions about the post crisis intervention by policy makers. I believe that such understandings can help applicants and the public in general to build trust within the financial system and help lenders help more people.
How does a loan come to be approved? Many banks have removed themselves since the crisis from mass-market home loans. Specialized local companies like Peak Mortgage now represent a main route for first-time home buyers and moderate-income families to get a loan. This is newer thinking and often doesn’t match up with some parents’ advice, but it’s true. The current regulations in place since the crisis prevent many lenders who are no longer in business from making what we call “liar” loans. Fifty-two percent of housing loans originate today through nonbanks. Loans get approved through active planning by all involved.
Besides helping applicants plan their application, the lender plans too. The government guarantees loans through its mortgage corporation call Ginnie Mae. Investors buy securities made of these loans. If a borrower stops paying, the mortgage company servicing the loan pays the investors until the government guarantee gets processed to reimburse. Local mortgage lenders could run out of money quickly if bad decisions are made. Conversely, everyone wants the borrower to make good decisions too.
Talking about home equity and taking money out of your equity should be something that applicants think. You should also consider that just because you are approved for a loan doesn’t mean that it is affordable or a good idea.
Because rate increases this month and in December are so highly anticipated, borrowers should also be on the lookout for predatory lending.
Want to know more? Email me at MPattullo@PeakMtg.com
We lend where we live,
Mortgage Advisor • MLO# 229675 • Peakmtgnw.com