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A majority of consumers are terrified of the mortgage process

The overwhelming majority (92 percent) of U.S. consumers recognize buying a home as a better financial decision than renting, a national survey from Sente Mortgage confirmed. The problem is that most (70 percent) do not know how or where to start the process.

But it’s not their fault.

The mortgage process is not a simple one. After all, its complexity was one of the causes of the sub-prime mortgage market collapse, along with why so few people saw it coming. And as Sente Mortgage’s research makes clear, that complexity could be scaring away prospective homebuyers.

A new fear of mortgages

Forty-four percent of survey respondents described the mortgage process as scary or intimidating; 30 percent were unsure what mortgage amount they could afford; 25 percent said that they did not understand the long-term financial impact of buying a home; and one in five admitted they did not have the financial education necessary to make a home purchase.

“The homebuying process is complex, and it’s clear that for many of today’s consumers, gaps in financial education are leading to some risky purchase behaviors,” said Tom Rhodes, CEO of Sente Mortgage. “Unfortunately, many of the most valuable resources available to buyers go grossly under-utilized, but with the right guidance and support, owning a home can be one of the biggest contributing factors to long-term financial success.”

An opportunity to show value

One of the valuable sources to which Rhodes was eluding is real estate agents.

Most people do not take or ask for mortgage advice – respondents were 11 percent more likely to ask for vacation advice than mortgage advice, and were twice as likely to compare options when buying a TV than when selecting a mortgage. But they trust their real estate agents. Fifty-one percent, in fact, rely on their agent to recommend a lender, and that creates an opportunity to show value.

For a potential buyer whose only holdup may be a fear of mortgages, an agent competent in the lending process could be the difference between purchasing and choosing to rent for another year.

via https://chicagoagentmagazine.com/2016/11/30/buyers-fear-mortgages-agents-opportunity/

 

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Why Your Mortgage Lender Needs All That Paperwork

As a loan officer, I don’t just ask for paperwork to be a pain in the…

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QM that’s why. The Qualified Mortgage became a thing in January, 2014. Proposed, promulgated and made law of the land by the CFPB (Consumer Financial Protection Bureau) as a safe haven for lenders that played by the rules. Unveiled and delivered to the mortgage lending universe in tandem with ATR (Ability-To-Repay) underwriting guidelines, QM protects lenders from loan buybacks if they follow the CFPB “how to” directions for assembling a mortgage loan file.

QM is a good thing. So is ATR. Together they provide a standard; a common sense (most of the time), make sense approach and framework for determining borrower wherewithal and then providing a schematic for how to corroborate that wherewithal. If lenders stay in the QM/ATR lane and deliver audit worthy loans to secondary markets like Fannie Mae and Freddie Mac, then even if a loan goes bad, the lender will not be at risk of buying it back.

And remember for you history buffs, bad loan buybacks led to the great mortgage collapse almost a decade ago.

The primary weapon in the lender defense arsenal to fend off the dreaded buyback is verifiable proof, mostly in the form of documentation. Paystubs, W2s, 1099s, tax returns, bank statements, IDs, real estate contracts, evidence of this, evidence of that, letters of explanation, and on and on. Essentially any and every piece of information disclosed and used to make a mortgage credit decision, needs to have a bona fide and verifiable document trail that proves beyond a reasonable doubt that what you say and what you do is in fact what you said and what you did.

read more via http://www.forbes.com/sites/markgreene/2016/04/03/why-your-mortgage-lender-needs-all-that-paperwork/#1ff706a45b1d