Coping with Today's Mortgage Market
If you're like most Americans, you've seen a lot of alarming news about the state of the mortgage industry. The mortgage industry is undergoing a shake out, and the turbulence we're seeing may continue for some time. And yet, interest rates are still at historically low levels, and tens of thousands of borrowers are getting good competitive mortgage loans every day. Credit is still available and lenders are, of course, still making loans.
The landscape has undoubtedly changed, but it's not time to panic. It's simply time to get informed. At Millenium Home Mortgage, we're committed to helping you understand what's going on in the market, get the information and answers you need, and helping your clients find the right loan for them to buy the house of their dreams.
What's Happening Now
Today, most of the banks and lenders that make mortgage and other home-related loans sell those loans into a secondary market of investors. The turmoil in the mortgage market is being driven by a liquidity crunch, which simply means that there's less money available from those investors to buy loans from banks and lenders. The effect is that lenders are being more conservative about the types of loans they will underwrite and how much risk they will accept. Certain types of loan products are being eliminated, program guidelines are changing daily and gone are the days when a borrower with less-than-perfect credit could get a mortgage with no proof of income and no money down.
You may worry that your client's may not be able to get a home loan right now. The fact is, many homes are being purchased, many loans are being funded and many borrowers are finding great, competitive deals. Here are some tips you can pass on to your clients to reassure them in this unique market:
*If your clients are "prime" borrowers looking to buy a home, they are in a strong position because lenders are clamoring for that type of business. What does "prime" mean? If a borrower's credit score is 700 or higher, if they can document their income and assets, and if they have at least 10% to put down, they are considered among the least risky of borrowers and shouldn't have a problem getting a great loan at a competitive rate. The same holds true if one is in the market to refinance an existing mortgage.
*Now more than ever it's critical to help your client do their homework. Millenium Home Mortgage was built to help you do this-we can fill out one form to get rates and offers from multiple lenders. Some borrowers mistakenly believe that working with multiple lenders who may pull credit reports will hurt their credit score. The fact is that you have a 14- day window to talk to as many lenders as you want without impacting your score. So, whether you use Millenium Home Mortgage or choose to shop around on your own, make sure you encourage your clients to engage with multiple lenders who will compete for the business.
*Owning a home costs more than just the mortgage payment. When your client's are thinking about what they can afford, don't forget to remind them about property taxes, insurance and maintenance. Being realistic upfront will make your clients that much more likely to obtain the financing they need and want. Millenium Home Mortgage can help your clients determine what they can afford before they begin house shopping to avoid any surprises later.
In our current market situation it is so important for clients to truly understand the details of their mortgage loan. If they choose an Adjustable Rate Mortgage, it is imperative they know when and how it will adjust. They should be well educated in the pros and cons of short term vs. long term fixed rate loans and then decided which is best for them. Together, we can make our clients better borrowers!
I invite you to contact me at any time so that we can help our clients make 2008 GREAT!
Warm Regards,
Marianne Jones
Millenium Home Mortgage
40 Baldwin Road
Parsippany, NJ 07054
973-402-9112 ext. 3000
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