Getting a mortgage can be very frustrating. You find the right house, you fill out that long loan application, you collect all the required paperwork, you fax even more paperwork and speak your loan consultant multiple times during the entire process but yet somehow your loan is not approved. You have a lot of questions but you do not get any answers from anyone.
Why is this happening?
Now, more than ever, mortgage companies are becoming more restrictive when it comes to loaning money to potential home owners. The biggest reason why mortgage companies have become tighter is because the two financial juggernauts that purchase mortgages, Fannie Mae and Freddie Mac, need government financial assistance.
When the two biggest mortgage companies need financial bailouts, it starts a trickle down effect. Fannie Mae and Freddie Mac become more restrictive with their mortgage purchases. Mortgage companies that sell their mortgages to Fannie Mae and Freddie Mac will become more restrictive with the loan applications they approve.
How can I ensure my loan closes?
The United States Government is very concerned about the financial stability of Fannie Mae and Freddie Mac. If these two companies fail, the entire mortgage industry will collapse. The financial bailout will ensure that money will still be widely available to people who want to purchase a home or refinance their existing home loan. When looking to refinance or purchase a home, here are the some smart moves you can do to ensure your loan closes.
First and foremost you should shop for a mortgage loan. The company you used in the past may not be in business. Ironically, shopping for a mortgage meant getting the lowest possible rate. Now, shopping for a mortgage will mean finding a mortgage company that can get your loan closed. The byproduct of shopping for a mortgage is that you will be able to determine what the average rate and mortgage closing costs should be for your mortgage loans. You will also have backup mortgage companies in the event your first mortgage company can’t get your loan closed.
You also might want to consider local credit unions and banks. In the past they had higher rates than most mortgage companies but the downturn in the mortgage industry led to credit unions and banks offering competitive rates. You will still need to qualify for a loan and they may have stricter loan guidelines but by getting a loan at your credit union or bank, they may offer lower fees on your mortgage loan. They may also offer you even reduced fees on savings and checking accounts and other financial services.
Despite the problems that are facing Fannie Mae and Freddie Mac, the government bailout will ensure that these two companies will continue to purchase mortgages from mortgage companies. The mortgage economy is also a small fraction of the overall wealth of the United States so there is still plenty of money available for borrowers. You can still get a loan but the smart thing to do right now is to seek as many alternatives for financing you will ensure that your loan will indeed close.