People continue to ask if banks started making home loans. This is an amazing question since they never stopped making home loans. Yes, they are actually using financial criteria before making loans but if you are credit worthy, you can get a loan.
Banks have returned to the rules or 10+ years ago. Loans are readily available with 10% down payments or greater. There are FHA loans with 3.5% down payment but FHA loans entail more red tape and higher lending fees.
I actually just sold a home and this week and they locked in a rate under 5%. If you have bad credit, you will not get a loan. The problem is people with bad credit feel entitled to loans. There are simply no investors dumb enough to "donate their hard earned savings" for high risk mortgages.
The hope of those with poor credit is for the Government to blackmail or extort financial institutions to repeat the same mistakes over again. Our hope is the Government will actually help. How about providing education for borrowers so that they have the opportunity to improve their credit and eventually they can qualify for a mortgage by earning it?
Mortgage companies/lenders lend money, package the mortgages and then sell them on the secondary markets. The secondary markets are investors. Investors have learned that the high risk home loans are "junk" and will not purchase them. If the banks decide to make these high risk loans, the assets of the bank would rapidly be tied up for many years since no one will purchase the paper. Banks do not have enough reserves to actually hold onto all of those mortgage notes.
In addition they have learned they can not afford the high rate of default of the sub prime borrowers. There are concerns with purchasing a primary residence out-of-state without a job or income in this state. Many investors/speculators were doing this. These investors/borrowers had a huge rate of default. Either the speculators were hoping for a quick buck or the home owner could not find the job they had hoped.
Income verification is now essential to getting a loan (and the income must be transferable to your new place of residence). Many defaulted loans were because of people relocating "and hoping to find a similar job". Mortgage companies were making loans to these people and now have learned the foolishness of this plan. You need to have an actual documented income to assure you can actually payback the loan. Sounds obvious, no?
Banks and Mortgage companies are still in business. Their business is to safeguard our deposits and lend out our money responsibly. They are actually running their institutions responsibly. This is the way it should have been all along. Home ownership is the American Dream but it is the result of responsibility and hard work. The American Dream is reality but it is not a gift based on the sweat and sacrifice of another.
Charlotte Real Estate offers a multitude of opportunities. Your American Dream awaits.
