![]() |
Home Loans - Lenders Continue to Offer High-Risk LoansHome prices in the Untied States continue to soar, and the remarkable run of real estate as the "must have" investment continues. The median price of a new home, which only recently crossed the $200,000 barrier, is now $215,000. The high prices of homes haven't deterred buyers; sales in June reached a record number of units. There is some concern in Washington about the explosive real estate market, and Federal banking regulators issued lending guidelines in May that urged lenders to be more cautious when lending money for home purchases. How have lenders responded to these guidelines? They have made it even easier to borrow money. It seems rather odd for lenders to make it easier to lend money after having been warned that they've been lending money too easily, but that's exactly what has happened. Some banks have lowered the minimum credit score necessary to obtain a home loan or increased the percentage of income that may be spent on a mortgage. Others have introduced loans that require no proof of income. Still others have begun offering a wider variety of no-interest loans and dangerous Option ARM loans, which can actually raise the principal of a loan after a buyer makes a payment. Why are lenders easing loan restrictions after being warned that they are too lenient? The primary reason is competition. The market is red hot right now, and due to the fluctuations in the stock market in the last five years, everyone wants to invest money in real estate. With so many people flocking to borrow money, lenders want to do as much business as possible. They also want to do more business than their competitors. By lowering qualifying standards, lenders can lend more money. It's that simple. There are several problems with this scenario. Some percentage of buyers will always default on their mortgages. When the standards for obtaining a loan are lowered, that percentage will certainly increase. While foreclosures currently remain low, they combination of lowered standards and rising prices will certainly contribute to an increase. An expected increase in interest rates would make the situation worse. The effects of these changes in lending can be felt by most anyone. If you are considering buying a home with a mortgage, be careful. Don't automatically assume that you will be comfortable making a $3000 house payment just because the lender tells you that you "qualify" for it. You must still leave within your own means, and the mortgage broker isn't really concerned about that. He or she just wants to sell the loan, and doing so may not be in your best interest. If you are going to take out a home loan, create a budget and determine how much you can comfortably pay each month. That figure will undoubtedly be less than what your broker is willing to offer. Stick with your own figure, and don't let the fever of the marketplace sway you. After all, you are the one who has to make the payment each month. ©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to personal bankruptcy, debt consolidation and credit counseling, and HomeEquityHelp.com, a site devoted to information regarding mortgages and home equity loans.
Mortgage Refinance Rates Fall for Most Loan Types Investopedia Mortgage and refinance rates today, July 26, 2024: Rates are well below their 52-week averages Yahoo Finance Mortgage Interest Rates Today, July 26, 2024 | Rates Steady After Falling Earlier This Month Business Insider Mortgage and refinance rates today, July 24, 2024: Rates have staggered since last week Yahoo Finance Mortgage refinance demand drops further, despite homeowners sitting on $17 trillion in equity - CNBC Joe and Jill Biden refinanced their Delaware home 20 times — raking in $4.2M from the $350K property New York Post Average Mortgage Interest Rates: Mortgage Rates by Credit Score, Year, and Loan Type Business Insider Mortgage Recasting: What It Is And How It Works Bankrate.com How to Refinance Your Mortgage NerdWallet Current 15-Year Mortgage Rates Business Insider Current Mortgage Trends: Are Mortgage Rates Going Down? Business Insider Jumbo Loan: Definition, Rates, and How to Qualify Business Insider 15-Year Mortgage Refinance Rates: Compare Current Rates Business Insider Best Mortgage Refinance Lenders of July 2024 Business Insider How Much Does It Cost to Refinance? Average Closing Costs by State Business Insider How To Refinance An Underwater Mortgage Bankrate.com FHA Refinance Rates: See if You Could Lower Your Rate Business Insider Mortgage Interest Rates Today, July 24, 2024 | Rates Hold Steady Business Insider Rocket Mortgage Review 2024 Bankrate.com Current VA Refinance Rates: See if Refinancing Is Worth It Right Now Business Insider Understanding 30-Year Mortgage Rates: A Comprehensive Guide Business Insider Today's Mortgage Rates by State - July 24, 2024 Investopedia Best Refinance Lenders of July 2024: Refinance Your Mortgage The Motley Fool Refinance Rates Today: Compare Mortgage Refinance Offers Business Insider What current mortgage refinance rates mean for your situation CNN Underscored Current Home Equity Loan Rates: Your Guide to the Best Rates Business Insider Mortgage Points: What Are They And How Do They Work? Bankrate.com Mortgage Interest Rates Today, July 21, 2024 | Rates Are Down This Month. Will They Continue to Drop? Business Insider Assumable Mortgages 2024: How They Work, Benefits, and Insights Business Insider Refinance applications increase despite overall drop in mortgage activity Mortgage Professional Real Estate Housing Market 2024: Will Home Prices Drop? Business Insider Is it Time to Refinance Your Mortgage? That Depends on When You Closed The Wall Street Journal Mortgage refinance demand jumps to two-year high Morning Brew Should You Refinance Your Mortgage In 2024? Bankrate.com MBA: Mortgage Applications Decreased in Weekly Survey Calculated Risk Mortgage Rate History: 1970s To 2024 Bankrate.com How To Get The Best Refinance Rate Bankrate.com 30-Year Mortgage Refinance Rates Business Insider Tremont Realty Capital Announces the Closing of a $27 Million Mortgage Loan to Refinance an Industrial Property in Wayne, PA Business Wire Do I Need Money Down To Refinance My Mortgage? Bankrate.com Discover Home Loans Review: Learn About Discover Home Equity Loans and Mortgage Refinancing Business Insider Housing Market Predictions 2024: What Homebuyers Should Know Business Insider Types of Mortgage Refinance Options Bankrate.com Cash-Out Refinancing: What It Is, How It Works Bankrate.com Cash-Out Refinance For Home Improvements Bankrate.com Should You Refinance Halfway Through Your Mortgage? Bankrate.com What Credit Score Do You Need To Refinance? Bankrate.com Mortgage Interest Rates Today, July 22, 2024 | Rates Are Dropping. How Low Could They Go? Business Insider Are Cash-Out Refinance Rates Higher? Bankrate.com Loan Modification Vs. Refinance Bankrate.com Best Student Loan Refinance Companies of 2024 Business Insider Refinance Requirements: What You Need to Refinance Your Home in 2024 The Mortgage Reports 15-year refinance rates: Pros, cons and current lenders offers CNN Underscored Should You Refinance To A 15-Year Mortgage? Bankrate.com Pros and Cons of a Cash-Out Refinance Bankrate.com
|