What has NOT changed in the mortgage business.



“I love you just the way you are . . . “

Yes, things are changing in the mortgage business.  Things HAVE changed; things ARE changing; things WILL change, and things will keep on changing.  But, for the above-average, Billy Joe(l)-borrower, things are just about business-as-usual.

So what is all the confusion about — as you have hopefully read in my past posts, the mortgage business (from an underwriting, credit qualification and secondary market perspective) is going through huge changes– some would argue a self-inflicted market-correction.  To condense two or three posts into the short-version of the story, here it is:  investors got greedy and started creating loans they could provide to people who had little-to-no business purchasing a house in the first place; others, who did have business purchasing a home either made a bad choice in loan program, or got bad advice from their loan officer or both; these loans are now starting to adjust and the people ALL THAT MUCH MORE can’t afford the loans or the homes that they are living in.  And with the costs of selling (Realtor fees, closing costs, etc) combined with a rate of appreciation lower than normal in most markets (or what I would argue is now BACK to normal, or what the sensationalists would call the housing bubble), borrower’s can’t make their payments, and they don’t have any(equity)thing to stay for, so they walk.  The people (borrowers) are angry because they didn’t “fully understand” what type of financing they were getting in to; the investors are angry (or out of business) because they didn’t “fully understand” how much risk they were taking on; mortgage professionals are angry because the brunt of the finger-pointing is being directed at them; and the US Government is angry because they didn’t (and apparently still don’t) understand the full implications of saying ridiculous things like, “everyone deserves a decent place to live that they can call their own.”      

Sure, everyone should have a decent place to live.  But does everyone deserve to own a house — a place they can call their own??!!??  That’s like saying that everyone deserves to borrow a large amount of money from a bank or lender . . . so, then, everyone deserves to be able to get a mortgage???  (deep breath . . . back to the post at hand . . . deep breath . . . save it for next time)

So, back to the good news — what has not changed??

1.  100% financing is still available.

2.  1st and 2nd mortgage financing is still available.  (80-20, 80-10-10, etc)

3.  Mortgage rates are still at historic lows (some days under 6.0%).

4.  Owning a home (with responsible financing) is better than renting. 

5.  “No doc” financing is still available (under certain credit and downpayment terms).

6.  The payment of mortgage interest and property taxes still creates a tax advantage.

7.  Borrowers with great credit can still get great mortgage financing.

8.  Borrowers with good credit can still get very good mortgage financing.  Even borrowers with below average credit can still get reasonable mortgage financing.

9.  Borrowers with good (stable) jobs and consistent income can get a mortgage with a payment consistent with what they can afford (based on monthly debts, car payments, credit card payments, etc).

10.  The BEST way to get the best advice, to end up with the best loan program at the best rate, with the very best service you’ve ever experienced is by using Hillside Lending.  Yes, very self-promoting, I know.  : )

I echo the wise words of the Piano Man — “I took the good times . . . I’ll take the bad times.  I’ll take you just the way you are.”

Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit www.hillsidelending.com.

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