Shopping In A Tightening Mortgage Market

Shopping In A Tightening Mortgage Market

Shopping in​ a​ Tightening Mortgage Market
In recent months the​ media has been rife with stories of​ a​ meltdown in​ the​ mortgage sector .​
And while reporters are often prone to​ hyperbole,​ there's no denying that the​ home financing industry is​ suffering .​
Mortgage investment funds have faltered,​ home prices have declined,​ residential foreclosures are on​ the​ rise,​ and about one hundred nationally operating lenders have closed their doors.
But many homeowners struggle to​ understand what the​ current mortgage climate means for them .​
What caused the​ current situation? How will the​ downturn affect them? And what can they do to​ avoid any negative repercussions when purchasing or​ refinancing a​ home?
Domino Effect
Recent events within the​ mortgage industry have fostered a​ domino effect which has toppled many precariously balanced facets .​
During the​ most recent housing boom many borrowers felt emboldened or​ were encouraged to​ obtain adjustable rate mortgages on​ homes which were realistically outside their comfort zone .​
Some went so far as​ to​ adopt Option ARMs and pay a​ minimum payment which didn't even cover monthly interest .​
Unfortunately,​ as​ interest rates rose and teaser rates expired,​ many of​ these borrowers found themselves in​ over their heads.
This resulted in​ growing mortgage delinquencies and foreclosures,​ fewer first time buyers,​ and falling home prices as​ demand dried up .​
As demand lessened the​ situation became worse,​ and the​ lenders who had originally funded the​ failing loans were required to​ take on​ obligations which homeowners could no longer manage .​
By 2018 those obligations had reached a​ breaking point for some lenders,​ and they began to​ close their doors.
New Requirements
As often occurs,​ government regulators and officials reactively weighed in​ and began examining some of​ the​ fast and loose lending tactics which had caused the​ mess .​
Lenders have consequently enacted stricter loan requirements and funding obligations to​ negate the​ need for government legislation .​
And while that strategy has reduced future abuses and irresponsibilities,​ it​ has done little to​ assist borrowers who are struggling to​ keep their homes .​
It has also curbed the​ flow of​ first time buyers even further,​ which in​ turn has crimped demand still more.
As a​ result of​ these stricter requirements,​ homeowners and buyers today can expect lenders to​ be more demanding .​
The sun is​ setting on​ fuzzy income requirements and no-down home loans .​
And credit score requirements are becoming increasingly strict .​
Whether you're looking to​ refinance or​ purchase a​ home,​ make sure you​ have some money for closing costs and a​ down payment,​ present solid documentation of​ your income,​ and take the​ necessary steps to​ clean up any credit report discrepancies before you​ begin the​ mortgage process .​
And above all,​ if​ you're buying a​ home don't extend beyond your means: it's better to​ keep a​ smaller,​ less glamorous home than to​ loose a​ larger,​ chic home.
Finding the​ Right Deal
Over the​ past few years many lenders and banks have been aggressively marketing to​ consumers .​
That's because it​ benefits them to​ work directly with you​ .​
But the​ best way to​ find the​ right mortgage today is​ via a​ mortgage broker or​ aggregation service .​
Working with only one lender can leave you​ vulnerable to​ their corporate motives,​ and unless you're knowledgeable about the​ mortgage industry you​ might end up with a​ bad deal .​
And seeking out two or​ more lenders directly can be stressful and time wasting .​
a​ mortgage broker can help you​ find multiple local and national lenders who can offer the​ best mortgage deals,​ regardless of​ whether you're purchasing a​ new home or​ refinancing an​ existing one.

But when using a​ mortgage broker it's important you​ don't jump at​ any old company .​
Many brokers have an​ online presence: but a​ website alone doesn't guarantee a​ bona fide company .​
Before filling in​ an​ online loan application you​ should look for some important content and links .​
is​ the​ company a​ member of​ the​ Better Business Bureau and legitimate mortgage organizations like the​ MBA? Do they offer sensible advice free of​ charge? Does their website look professional and is​ it​ secure? Do they have their finger on​ the​ pulse of​ the​ mortgage industry? Do they readily provide customer testimonials? Are they available to​ talk to​ you​ over the​ phone? Only the​ best brokers can fulfill all of​ these requirements,​ and they are the​ ones who are worthy of​ your business.
If you're falling behind on​ your mortgage payments and even a​ broker can't help you,​ just remember you​ still have options .​
Lenders and investors don't want to​ be burdened with foreclosed-on properties in​ today's market .​
So call your mortgage company and ask about restructuring your loan .​
It's better for your lender if​ they get a​ reduced payment over more years than if​ your home is​ foreclosed and sits dormant for months.
The mortgage market is​ changing at​ a​ rapid pace,​ and prospective borrowers are finding it​ harder to​ find an​ affordable and competitive deal because of​ the​ lack of​ restraint of​ recent years .​
But with careful preparation and the​ right broker you​ can successfully navigate today's hurdles and find a​ mortgage which suites your needs for years to​ come.

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