Whats NEW in Mortgages Today

There was a story in the Wall Street Journal wondering "But if rates are so low, why isn't demand for new loans picking up? For one, most borrowers who could refinance probably did so last year, when rates fell below 5% in March, August, and December. Many borrowers with an incentive to refinance can't qualify with today's tougher lending standards or don't think it's worth paying the closing costs on a new loan. Credit Suisse estimates that around 61% of all borrowers with a 30-year fixed rate mortgage could lower their mortgage rate by 0.75 percentage point at current rates. But analysts estimate that only 38% of those borrowers could actually qualify at current standards. More borrowers can't qualify because they don't have enough equity in their homes, their credit scores have taken a hit, or they've seen their income reduced."

Getting past all of the statistics and numbers, it still is amazing how many people have not looked into refinancing their current mortgage. Approximately 30% of the homeowners are able to do something right now and yet the activity for new loans is down?  When the opportunity to save money on such a large and long term investment is here, the question as to why people aren't taking action must be asked.

Sure, lenders are more stringent than they have been in the past. Lenders have very good reason to have the measures in place today to manage risk. All of the losses that occurred and continue to occur are a testament to the practice of stricter lending guidelines.

Knowing that lending guidelines have tightened up but yet so many people still qualify is a sad fact.  Everything has tightened up though.  Not only have the lenders reformed their criteria for borrowers, the Office of Insurance and Financial Regulations have imposed new requirements for mortgage brokers.  While banks do not have the same requirements as mortgage brokers, the pure fact that the requirements to actually lend borrowers money has tightened up as well. Individuals are required to be individually licensed in order to work in the mortgage industry, unless they work for a bank, then they are required to register and have background checks, but are not required to take and State exams or pass any certification tests.

Maybe consumers are concerned about who they deal with and have chosen to not take action in fear that they might not get the very best mortgage from a reputable person. With all of the new requirements on mortgage brokerages, the mortgage broker is safer and more adept at providing the best product and service compared to a bank where the same requirements are not required.

Consumers can have more confidence now when mortgage shopping, knowing that there used to be over 35,000 individuals originating mortgages just 3 years ago - there are less than 4,000 currently in 2010.  Essentially, the ones that are left in the brokerages deserve to be there and have done what is required to stay and serve their clients. Banks will always be around and quite honestly, many of the loan officers that feared taking the State exams fled to local banks and credit unions as a "safe shelter" in order to circumvent these requirements. 

What is funny is that things have seemed to go back to the way they were decades ago.  Banks are great at holding your money and providing personal loans and credit cards. Mortgages are something they offer, but at far less capacity than they did in the last decade.

Mortgage brokers, on the other hand, are doing just what they are supposed to do - provide the right mortgage for the borrowers situation. They don't do car loans or credit cards or hold any deposits for banking, they just do mortgages. The mortgage you need when looking to purchase or refinance can be done very well by your local mortgage broker. They have ALL of the banks and their individual rates and credit criteria. Your local bank has their one and only rate offering for each product they may have, which these days may be 3 to 4 mortgage products.

Choosing to refinance with a mortgage broker will always get you a better rate, lower fees, and a tremendously larger selection of banks that can truly compete for your business. If there is that one low rate out there, the mortgage brokers have it while the banks may just come close. For a transaction that you should only be doing a few times in your lifetime, choosing the broker pays off huge dividends.

So rates are historically low, mortgage brokers that exist operate by the strictest guidelines, and the time to save money through refinancing your existing home loan is now. Will rates go lower? Maybe. Are they low enough now to warrant consumers taking action? Without a doubt.

We take pride in helping our clients save money and our business has been built strictly by referrals. We do not have an advertising budget like Lending Tree or Quicken Loans, we just make the best choices for our clients on a consistent basis. Let us help you and at least take a look at your options. Exploring possibilities to save money on refinancing your existing mortgage may be one of the smartest choices you will make in 2010.......or one that you definitely wish you would have done should you choose to maintain the status quo.