Mortgage Meltdown & Title Insurance
Rise and Fall of the Sub-Prime Lending Industry
The real estate and mortgage industries have been receiving extensive negative press due to increases home foreclosure and slow home sales. Not too long ago, the real estate and mortgage industries were at their prime. Home prices across the country soared and mortgage rates were extremely low. Lenders made several loan programs available to get just about anyone into their dream homes. The most popular was Sub-prime loans; these were loans given to borrowers who couldn’t qualify for prime loans from mainstream lenders. This deceptively boosted the mortgage industry and lured consumers with low credit scores and low income to take mortgages on homes they couldn’t afford. The lax screening process opened the door for consumers to line-up for Adjustable Rate Mortgage (ARM) loans with attractive teaser rates. For a few years lenders and borrowers alike seemed content with these new loan programs. Unfortunately, it was short lived. The attractive teaser ARM rates began to adjust. Monthly payments increased and borrower’s defaulted on payments they were already having trouble making.
Reality set in as more borrowers continued to default on payments. The lax lending practices began to turn the market. More and more homes went into foreclosure and mortgage lenders began to feel the pinch. The message resonated to the Department of Banking and Insurance. They responded by tightening lending regulations especially in the sub-prime lending market. Since fewer consumers were now qualified for loans, homes sales dropped leading to stagnant or decreased prices forcing more homeowners into foreclosure since they could not sell their homes. This sudden drop in borrowing and lending spawned a series of events seriously affecting the real estate and mortgage industries. Many mortgage companies closed their doors and some reputable lenders downsized operations. This also led to Wall Street investors taking money out of the mortgage market to seeking more profitable ventures.
The Department of Banking and Insurance has intervened, however. They are lending more money to reputable lenders whose companies were in jeopardy. They lowered interest rates to increase borrowing. The tide has not yet turned but it is on its way.
Despite the negative publicity brought on by the sub-prime industry many prime and sub-prime borrowers continue to make monthly payments on time. Loans are still available though fewer and tightly regulated, consumers can still purchase and refinance their dream homes. Additionally, potential home buyers now have an advantage. There are more homes available for sale at lower prices. There is still light at the end of the real estate tunnel.
How can Shopping for Title Insurance help in the current Mortgage climate?
Simple - shop and compare. Finding the best price for title insurance and closing services can lower costs associated with buying or refinancing a home. Low closing cost means higher down payments allowing more consumers to apply for better loan programs. Getting a 0 down, 100% financing is not as easy as it once was due to the current sub-prime lending issues. Regulations are more stringent and most borrowers can’t qualify. While this may deter many low income borrowers shopping for title insurance and lowering closing costs saves consumers money making it feasible to put money down for that dream home.
Shopping for title insurance helps consumers control where their money goes and how much they want to spend when buying or refinancing. Prospective home buyers knowledgeable of the market will be less likely to overpay on closing costs. Cutting out unnecessary expenses and saving money for a down payment is important so consumers can make smarter decisions when it comes to their money.
The sub-prime industry has cast a negative shadow on the lending industry; however there is still hope for consumers seeking a piece of the American Dream. While it may seem the future of borrowing is bleak, there are still ways to stay ahead of the game. Save money by shopping for the lowest rates!
Start your search by getting a title insurance and closing costs quote from myClosingSPACE.com today. Try our Quick Quote for purchase or refinance.
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