We are commonly asked why so much borrower information is required by the financial institutions for a home loan application when purchasing a house today. These days the financial institutions need to understand everything about our finances, and can sometimes call for three different sources to validate each and every item on the application form.
The federal government has established brand-new standards that currently require that the financial institution prove with certainty that you are indeed able to pay for the home mortgage. During the run-up in the real estate market, many people ‘qualified’ for home loans that they might never ever pay back. This resulted in countless households losing their homes.
The federal government intends to ensure this cannot occur again. Over the last 7 years, financial institutions were required to handle the duty of liquidating numerous foreclosures as well as negotiating an additional million plus short sales. Similar to the government, they do not want even more foreclosures.
Because of that, they have to double (perhaps even triple) check every little thing on the application.
The housing crisis that resulted in banks being extremely rigorous on paperwork, has allowed you to obtain a home loan rates of interest at or below 4%. May buyers have been told by family and friends that the procedure was a hundred times easier when they bought their house ten to twenty years earlier. These friends and family, who acquired residences 10 or twenty ago, experienced an easier home mortgage application procedure… however they also paid a much greater interest rate. The average interest rate during the 1990’s was 12% and 6.29% in the 2000’s.
In Summary, rather than focusing on the additional paperwork called for, let’s be happy that we have the ability to acquire a house at historically very low interest rates.