Getting a Mortgage May Be Tougher, But Still Very Realistic for Most Americans
Filed under: Fannie Mae, Qualifying for a Mortgage Loan
Recently you may have heard the media say that it’s difficult or impossible to get a mortgage. I’d like to clear up any confusion or untruths. It may be more challenging to go through the mortgage process today, but banks are still lending. Working with an experienced loan officer will definitely ease the process.
One of the challenges is that borrowers are being asked to provide more supporting documentation to prove they are qualified for the mortgage. This is primarily due to tougher guidelines which aim to correct the errors of the previous decade. Banks today actually want to make sure that borrowers are able to pay back their loans – not an unreasonable request.
Another thing influencing lender guidelines are buy backs. Fannie Mae and Freddie Mac are returning default loans back to the banks that originated them if they were not underwritten properly. This causes many banks to now take a more stringent approach to underwriting. Historically, Fannie Mae and Freddie Mac have taken banks at their word when they said loans were eligible. If problems resulted, then Fannie Mae and Freddie Mac could force the lender to buy back the mortgages at face value and absorb any losses. As Fannie and Freddie have toughened up, so must the originating lenders.
Mortgages in the US are packaged and sold as Mortgage Backed Securities, which ultimately end up finding their way into investments such as retirement accounts and pension plan portfolios. Therefore, massive numbers of defaults affect our economic future in more ways than one. With this in mind, we should all be thankful that banks and lenders are putting more emphasis on properly qualifying their borrowers.
Rest assured, if you meet the income, credit, and asset (down payment) requirements of a conventional or government loan program, you will be able to borrow money for that dream home or investment property. The key ingredient within the process will typically involve working with a loan officer who has the experience and know-how to properly qualify a potential buyer.
Franklin Loan Center | NMLS 237653
Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, 4131316