BUYERS: ARE YOU QUALIFIED BUT NOT ABLE TO GET A LOAN?

Buyers: Are you qualified but can’t get a mortgage?

by The Dawn Thomas Team on November 6, 2013

One of the biggest unfortunate side effects of the Real Estate market crash was that qualified Buyers who wanted to buy were squeezed out of the market by the extremely strict borrowing rules. This strife has created a lot of all cash or the majority cash buyers which has also squeezed out other Buyers whom are qualified but do not have a lot of liquidity. Below are six ways to get a mortgage is your qualified and ready to buy. If you’re thinking about buying a home in the Silicon Valley, reach out to our experts here at The Dawn Thomas Team!
SIX WAYS TO ENSURE QUALIFIED BORROWERS CAN GET MORTGAGES
Source: The Wall Street Journal
Lingering concerns about accessibility to financing have prompted the release of a new report that presents potential reforms for any new housing-finance system—with emphasis on ensuring qualified entry-level homeowners can obtain a loan. The report is co-authored by Lewis Ranieri, the co-inventor of the mortgage-backed security. The report posits that extending loans to working-class borrowers was not the culprit for the housing bust; rather, poorly constructed loan products are to blame, and that policymakers and industry officials have learned the wrong lessons from the housing bust. According to the report, figures for loan applications and originations “look more like the America of the 1950s, and not the America of 2013.” The report makes the case for six key steps to improve the country’s course.
Making sense of the story

• To begin, building equity should be the focus for homeownership. The report argues that buyers need to be better informed about the benefits of buying a slightly smaller home with lower payments, or a loan with a faster amortization schedule, so they can build equity more quickly.
• Home-equity mortgages, or second mortgages, need more strings attached. The authors state that the ability to take equity out of a house with a second mortgage should only occur for major “life events,” such as a health-care crisis.
• Thirdly, the process known as “servicing” needs to be reformed in the mortgage market because it is problematic that servicers make the same amount of money if a loan is performing or if it’s delinquent.
• Fourth, greater flexibility is needed when it comes to determining a borrower’s ability to repay a loan. They argue that regulators need to implement rules that won’t create an overcorrection in the market.
• The report posits that home-rental programs should be promoted so that renters are provided an option to own. Renters would be able to build credit and work their way into homeownership.
• Lastly, healthy securitization markets need to be maintained so that large amounts of loans are pooled together and then sold off to investors.

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This blog is courtesy of The Dawn Thomas Team who is an award-winning Real Estate Agent team at Intero Real Estate Services in Los Altos 650-701-7822. We help nice people with selling and buying homes in the greater Silicon Valley