Worried about Getting a New Mortgage?
You’ve been on the fence about getting a new mortgage for a few months. Now, you are seeing the news that mortgage rates are on the rise and you are wondering if you’ve missed the boat. The good news is that you haven’t! Current mortgage rates are still near all time lows (for the time being) and it remains a great time to buy. But, you obviously have questions or you would’ve applied already! I will now move on to address some of those concerns that may have kept you on the sidelines for so long.
I believe the problem to be two-fold. Much like the stock market and other economic markets around the world, the housing market is largely led by fear. The first being the fear of loan application denial, and the other being the fear of uncertainty in the future of the housing markets. Put simply, most people believe they cannot get approved for a new home loan and even those that think they can, are too afraid to make the same mistake everyone else made in the past decade; financial over-extension or being “house rich” and “cash poor”. Let’s address each concern individually, shall we?
Fear of Loan Denial
First off, let me start by saying that most of our loan applicants get approved for the financing they seek. I’ll repeat that…most people that are submitting loan applications with us these days are getting approved! So, why is the main stream media and that guy in the cubicle next to you at work complaining about how hard it is to get a mortgage these days? Because it requires more work, that’s why. You see, one of the major mistakes that the mortgage lenders made leading to the burst of the housing bubble was to allow for risky, no documentation loans for borrowers that simply didn’t have enough income to support the payments. In other words, some people were getting a new mortgage they couldn’t possibly pay back. So now that the banks are actually making sure that applicants have the ability to repay, people automatically associate that with a more difficult and complicated process and it’s really not.
‘The truth is that most mortgage lenders DO want to approve your loan!’
Mortgage lenders want the same thing you want; for you to be able to make the payments on your home loan, every month, until the loan is paid off. So in reality, by looking out for themselves they are actually looking out for you, since your interests are aligned with one another. The only major differences I’ve notice in the application underwriting process are the increased verification of income and the increase in documents that need to be signed at closing; that’s about it! The reality is that If you could qualify for a full documentation loan back then (where you show your income instead of just ‘stating it’), you will most likely qualify for one now!
Uncertainty in the Housing Market
Now, on to the fear of uncertainty in the housing market. One look at history will tell you that home prices, overall in the long term, always maintain an upward movement. And, with home prices beginning to increase in most areas around the country, specifically Florida, it’s pretty safe to say that we’ve hit the bottom and are on the way back up. Some naysayers may cite their concerns about the ‘second bubble’ caused by the horde of homes currently in foreclosure limbo (commonly referred to as ‘shadow inventory’). This will have little to no impact on the housing market, in my opinion, because of the exponentially growing demand for homes in Florida. You see, millions of Floridians that lost their homes in foreclosure from 2007-2010 are now eligible for a home loan yet again. Ask anyone you know currently looking to buy a new home, and they’ll tell you that the biggest reason they don’t already have one is because they simply cannot find one, not that they can’t afford or get approved for a loan.
Don’t Be Scared to Buy a Home!
The mainstream media has lied to us (again!? yes, again!) and sold us the idea that new home loans are impossible to get. Well, I can tell you right now that is the furthest thing from the truth and you should really look into it for yourself. Basically, if you have steady income, a credit score somewhere in the 600 range and no foreclosures or bankruptcies in the past few years, you just may qualify! Stop letting everyone else tell you that getting a mortgage is difficult Take matters into your own hands and reap the rewards of homeownership in 2013!