subject: Temecula Mortgage Broker Discusses the Reality of Mortgage Lending [print this page] Temecula Mortgage Broker Discusses the Reality of Mortgage Lending
You see it almost every day in the financial news, articles talking about how banks aren't loaning money. While this may be true in some instances, it absolutely does NOT mean home lending isn't occurring.
As a Temecula mortgage broker, I have witnessed lenders on a harsh lock down with lending their own funds since 2008. With all the economic apprehension over the past several years, the lack of lending probably makes good economic sense. The first thing a bank wants to know before they impart money is how they are going to get paid back. When reimbursement is shakey, banks won't lend.
This is where Fannie Mae, Freddie Mac, FHA and VA come to the rescue. There is no sense in going through a long explanation on how each of these entities influence mortgage lending, just recognize they are all government entities that securitize, guarantee or insure mortgage loans offered by banks. In one way or another, these companies give banks the security they need. I have seen different numbers, but roughly 90% of all mortgage loans today have a stamp of approval from either Fannie, Freddie, FHA or VA.
These mortgages aren't just for people with perfect credit, 20% down payments or high income brackets. FHA will finance up to 96.5% of a home purchase and there are other programs that compensate for those with challenged credit. This is true for refinance loans also, and if you existing loan is FHA, you may not even need an appraisal. Fannie, Freddie and VA all have different variations of similar scenarios.
What is the bottom line? What should you believe? The headlines we see are actually true about the banks. They aren't doing a great deal lending. BUT the headlines are also a little ambiguous. Mortgage loans are being made under surprisingly aggressive terms every day as long as the banks have a virtual guarantee of repayment.
If you have been buying into the headlines, and sitting on the side, it may be time to dig in and find out what possibilities are. You might be happily surprised. Take advantage of record low interest rates and bargain home prices today. Don't believe all you read and make sure that regardless of whether or not you require a Temecula home loan or a loan in any other part of the country, you need to be working with an practiced home loan consultant.
