What is up with all the paperwork required by Lenders today, in order apply for a mortgage loan…you may ask? They seem to insist on multiple sources of validation for each line item on the loan application and want to know what seems to be absolutely everything about you!
You may have applied for a mortgage loan years ago or may have heard from your friends, family and co-workers that the process was so much easier when they bought their home 10 to 15 years ago.
With that being said, let us examine 2 very good reasons why the loan process may seem or sound more trying for today’s Buyer, than perhaps at any other time in our history.
1. There are now new government guidelines that require Lenders to prove beyond a reasonable doubt that a Buyer is indeed capable of paying their mortgage.
Prior to the most recent housing crisis, many people ‘qualified’ for mortgages that upon subsequent investigation…..they could never pay back! As we are now painfully aware, this led to millions of families losing their homes through the foreclosure process. This is something that I am sure we would all prefer not to see happen again and thus the new government guidelines.
2. Lenders do not want to own property; they want to make loans
Due to the recent housing crisis, banks were left with no choice but to take on the responsibility of liquidating millions of foreclosures and also negotiating many short sales. This unwanted responsibility surely accounted for millions of lost dollars, as the banks now had to bear the cost of maintaining the foreclosures, paying insurance and property taxes etc….all while not receiving any of their promised mortgage payments from the defaulting home buyers.
Fast forward to today and one can easily guess why Lenders now require a lot of paperwork and verification, in an attempt to prevent a re-occurrence of them having to own and manage property.
How might this benefit today’s Buyer?
The housing crisis that precipitated the new government guidelines requiring banks to heavily scrutinize a potential Buyer’s ability to pay back their mortgage loan has enabled today’s Buyer to get a mortgage interest rate around the 4% mark. This is of course a historically low rate.
So, in essence those friends, family and co-workers that may have experienced a much “easier” mortgage application process, when they bought their home 10 to 15 years ago, likely also paid a higher interest rate (the average 30-year fixed rate mortgage was 8.12% in the 1990s and 6.29% in the 2000s).
The Takeaway
Yes, the mortgage loan application paperwork and process may be a little more trying than years gone by, but isn’t it great that you can now buy a home with such a low interest rate that you are literally saving tens of thousands of dollars in interest through the term of the loan?
As always, feel free to call, email, text or message me, as I am here to be service. You will be glad that you did!! 727.755.3434
