Why is there so much paperwork mandated by the lenders for a mortgage loan application when buying a home today? It seems that they need to know everything about you and requires three separate sources to validate each and every entry on the application form.
Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.
There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.
1. The government has set new guidelines that now demand that the bank proves beyond any doubt that you are indeed capable of paying the mortgage.
During the run-up to the housing crisis, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again.
2. The banks don’t want to be in the real estate business.
Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.
However, there is some good news in the situation.
The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate around 4%.
The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process, but also paid a higher interest rate (the average 30-year fixed rate mortgage was 8.12% in the 1990s and 6.29% in the 2000s).
If you went to the bank and offered to pay 7% instead of around 4%, they would probably bend over backward to make the process much easier.
Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates. Buy Real Estate
Can The Mortgage Process Go Completely Digital?
Technology is making the process of getting a home loan more efficient than ever before, but can it remove the paper trail completely? Buy Real Estate
Advances in technology have essentially re-invented TV, music, mobile phones and most other industries in the past 10 years. Currently advances in technology are finally starting to modernize the mortgage process. Buy Real Estate
As the tech savvy millennial generation prepares to purchase their first homes, some experts say they will gravitate toward digital tools. Furthermore, recent home buyers tend to have higher income and a more-educated background than in the past, this means that they are more likely to shop on the internet (and probably apply) for mortgages online. Buy Real Estate
Is it truly possible however, to have a 100% digital mortgage? Buy Real Estate
What every homebuyer needs to know about mortgage rates
Will they go up again? It’s the top-of-mind question for lenders, real estate professionals and real estate consumers. When interest rates take a hike, the complexion of the housing market completely changes. Buy Real Estate
If you’re a first-time homebuyer, you are no doubt following interest rates and the doings of the Fed. It’s confusing, isn’t it? Real estate industry jargon is bad enough but with mortgage lingo thrown in, it’s no wonder homebuyers don’t know where to start. Buy Real Estate