Before all the hoop-la of the Sub-prime Market Meltdown & Lenders here and there going out of business, getting loans for a client was all too easy on most occasions. In recent months, a shift has occurred and now we are back to a Market more similar to that of 6 to 7 years ago. While the Sub-prime market has drastically changed, conforming loans for those with good credit remain the same. Still though, the Market has changed. Let's look at some of the things that have come about:
Some areas have actually seen depreciated home values, others are now stagnant.- Appraisals are being combed over with a fine tooth comb to make sure the worth of the collateral is tight and unwaveringly acceptable to the Lender.
- More than ever, ALL Mortgage Professionals have to put together each loan file as tight and as efficient as possible. The days of 'Throwing it against the wall and see if it sticks' are over.
- The Media, in all their glory, created so much overly negative press about the Market and the Real Estate Professionals involved in it, that it has led many individuals to think it is a bad time to buy a home. It has also led those who already own a home to shy away from acting on refinancing at all, thinking they can't qualify or that rates are too high. I'll chime in on the rate thing once again. If you think a 6% rate on a 30 year Mortgages is high, you may just be a renter for life or a less than financially savvy homeowner.
- The shrinkage of the Sub-prime Market has narrowed the pool of Lenders and the guidelines have become more stringent for those whose credit, property type, etc are outside of the norm. The purse strings are tighter now than they have been for some time.
So, what does this mean for Consumers AND Real Estate Professionals? Quite simply, it changes the way the Mortgage Application Process is handled.
It used to be that you go through the application, begin processing the loan, and set up closing. Almost every Mortgage Application that was taken would be bought by some Lender, somewhere. Not so much anymore.
Now, a lot of Mortgage Applications are getting turned down because the pool of products has lessened. I was talking to the owner of my firm earlier today and he brought up a good point. All this means is that it changes the process, now many times A Plan will have to be involved.
Consumers - For those of you who have that dream of buying a home but don't think you would qualify, that's the greatest reason in the world to talk to a Mortgage Professional right now. What better way to make sure you can buy a home sooner rather later than establishing a plan of what you need to do to get to where you need to be? And the perfect way to do this is to talk to a professional. Same goes if you already are a homeowner and want/need to refinance, talk to somebody now. Establish a plan, most dreams and successes come to light by this very process.
Real Estate Professional- This is a similar type of thing with us now. Instead of application = processing loan = loan closes, you are and will continue seeing application = loan gets turned down = no closing. Yet, a slight change and adaptation needs to be placed upon today's equation. It is application = loan gets turned down = Set Up A Plan = Consistent contact & follow up = Eventual Client.
Relax, take a deep breath, and formulate a plan. Things aren't as easy as they once were and that is a good thing...for both Consumers & Real Estate Professionals. There is now more of journey to everyone's desired destination, all it will take is a little planning this time around.
Market is slower here...and yes...there are very strict rules now. Good. Makes for a qualified buyer who won't be getting in over their head.
Great insight, tips, suggestions to both the consumer and RE agent.
Thank you ....very much
Jason,
Loan officers actually have to put in an honest day's work to get many loans approved nowadays. It requires perseverance, planning and creativity sometimes to pull it through. The less than serious originators are being eased out.
Jason,
Nice Job!! It looks like this was a long Post to Write :0) Good Info.
Tom Weiss
Sis - No, thank you:-)
Missy - Good point, the long-term benefits of what has went on will far outweigh the short-term mind-sight that, "Boy, this sucks."
Randy - Building a plan (and acting/following it) is key. There is no sense in being in the same boat year after year and never moving forward.
Kathy - Absolutely!
Esko - An honest day's work, what a concept:-) I agree with you wholeheartedly!
Tom - Long post to write? Yeah, you are right....it took 10 minutes out of my night:-)
Sarah - Yup, just RELAX!
Jennifer - It isn't a good thing.....Amor?
Dan - Lol, I had to do something for my 200th post to tick you off:-)
Jason,
You never know until you try, then make a plan. This is good consumer information from a mortgage professional who has their back!
Jason - So far so good for us. Follows what you're saying at the top here. We're seeing little change in the process from before. Makes sense in our market. Most folks who buy second homes are financially qualified to do so. We're going to be off about 20% in demand this year from last. And a whole lot more than that from '05 and '04.
best
Jason... some good points. But what's sad is that the mortgage application process should have never changed. Meaning, loan officer's should have been paying attention to detail, not throwing it up against the wall. But we can blame this on several people. The biggest issue in my opinion? The actual loan officer because if you don't know, ask questions... but they don't. Again, some good awareness here.
Jason, I wanted to add...
- Take the app.
- Collect the stips
- Create a strong file
- Oh my! One gets approved!
- Sits in front of an underwriter with blinders on so tight, they would make Mr Ed cross eyed.
- Deal gets over stipped, customer goes elsewhere.
Doh!Jason,
This reminds me of my first client. It was application=promise of a loan=get rejected two weeks after closing was scheduled=make a plan=follow up for 8 more months=apply again=mortgage accepted=closed loan.
I learned a very valuable lesson with that transaction. Now, a lot of my time is spent grooming the client for the day when they'll be ready to make the move. It's all future business, as far as I'm concerned. I'm a patient man.
Great post...thanks for the reminder that it takes patience, especially in today's market, to survive. Oh...and a plan!
Kelly - A Plan B is crucial as well, good point.
Mom - Who is this 'Sardi' you speak of?
Paul - And I wish you worked in mine.
Lisa - Lol, feel free to do just that:-)
Simon - I hear you on that man.
Suzanne - Thank you, I hope people will realize that.
Gary - For the most part, I sense our markets are pretty similiar.
Belonger - Excellent point! Unfortunately, that's exactly what happened in way too many cases.
Matt - Exactly, 6 months down the road may be an entirely different market.
Neal - You DO tell it like it is!
Jeff - LMAO, always the bridesmaid huh?
Chris - Thank you my dear.
Geary - I'm up there:-)
Diane - Hopefully down the road I will be...
Andrew - And that's reason number 58 why I would love to work with a guy like you!
Jason - Excellent post. Great comments. Yes, borrowers need more than a pulse these days to qualify for a mortgage. That's a good thing. But for credit worthy borrowers, there are still plenty of products out there. They simply need to qualify for what they an actually afford instead of delusions of grandeur. Reality Check.
Nice words of wisdom.
Rey - Ideally, they should of been common all along. Thanks!
Linda - Thank you Linda. Well put.
Geeze, a PLAN? The Mortgage Industry folks are discussing development of a PLAN???
Well shoot me where I sit. :^)
Nice post Jason, need to bang a plan against someone that can easily replicate a consumer.... gimmie a call.
It's ringing, answer the phone Mr. Rob!
Jason,
I love love love reading your blogs. Before you, I would not even click on a blog that had any thing to do with mortgages. You make it all interesting, current and UNDERSTANDABLE. My eyes don't glaze over.
Hi Jason,
Even our market has taken a turn and the tide has changed. Thanks for the reminder about things we can do to turn a suspect into a prospect....I especially like:
Set Up A Plan = Consistent contact & follow up = Eventual Client.