This has certainly been a wild month in the mortgage industry. I’m sure you many of you have seen the headlines about the “collapse” of subprime mortgages and the impact it’s having on housing and the financial markets. The question is what does this mean to the average homeowner.
Over the past several years the mortgage industry experienced unprecedented growth. Homeownership rates have never been higher in spite of the huge increases in housing prices. In an effort to meet the demand for affordable mortgage payments lenders became creative with their programs and the guidelines for obtaining them. The net result was a lot of loans were made to everyday people who clearly didn’t understand either the situation they were in or the situation they were getting into. It’s true that many people have lost their homes to foreclosure due to either an increase in their payments or their lack of ability to properly manage their finances. With all that said, what’s happening right now is an overreaction by lenders and the institutions who provide money for mortgages. Everyone is trying to be cautious. No one wants to make a bad loan and lenders are being sorely criticized for the situation.
How does this effect you?
Programs that were available yesterday may not be available today. Tightened lender guidelines mean it may be tougher to get the loan program you desire. Over the past few weeks we have been working hard to research lenders who are willing to truly meet the needs of each individual borrower. There are some lenders who continue to offer the most popular products such as the 10/1 interest only . This program offers you a low fixed rate for the first 10 years plus the option to pay interest only. The result is greater cash flow and the security of knowing your payment won’t change. The interest only is a relatively new loan feature that consumers enjoy. That said I can see this being one of the loan programs that lenders may not offer indefinitely. If you or someone you know is considering either refinancing or purchasing a new home, now is the time to research your options and speak with a professional mortgage planner. Often times, a negative loan decision can be avoided by choosing the right person to assist you. In times like these, it takes more than good credit to get the right loan program, it takes knowledge and experience. My goal is to provide new and existing homeowners with the information they need to make an informed decision, I learned a long time ago that if you act in the best interest of your customer, you won’t ever have to worry about keeping them.
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