TV channels like Home and Garden TV highlight the difficulties that homeowners go though trying to decide on a home that is right for them. However the reality is that for many prospective home buyers getting a mortgage can often be more difficult than choosing what home is right for them.
With mortgage rates at a near all time low many people with mortgages are scrambling to rake advantage of these rates and lower their monthly payment. There is a refinancing boom out there and mortgage brokers just cannot keep up!! The reason being that they had to drastically reduce their workforce when the economy declined and house purchases went down. Now that refinancing accounts for almost half of all their business they are struggling.
Banks are also struggling as they reduced their staffing levels at the beginning of the year when interest rates rose. During this time refinancing came to a standstill. Now things have turned around the demand has increased – but so has the time its taken you close the loans. In some cases the turnaround time on a loan has doubled. With applications up 83% from the beginning of the year it is no wonder!
An associated problem that is compounding the delays are the tighter controls put on the applications by underwriters after the mass foreclosures of the past few years. They are stricter than ever before. Another associated issue is the fact that other businesses associated with mortgage loans (appraisers, title companies etc) have also downsized.
All of the above makes for difficult times for the government who are trying to spur a recovery in the housing industry. If lenders cannot deal with the volume of loans then any benefits to the recovery of the economy are lost. With refinancing and lower monthly mortgage payments consumers have more disposable income to spend. Banks can benefit too as they pick up associated fees etc that go with the loans.
This has resulted in recruitment drives across the country as lending institutions and banks attempt to hire trained professionals – many of whom were let go at the start of the year.
Information provided by mortgage calculator helping prospective home buyers with their finance options.
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