We are in the middle of a financial crisis not seen since the days of the great depression, market crashes or bombs leveling the city. Asking a bank for a mortgage in today’s market is like pulling teeth with a pair of broken rusty pliers. If the person in charge of lending the money does not actually laugh at you then he or she will most likely put you over the barrel in interest rates. Just 18 to 24 months ago it was easy to get a mortgage with fairly reasonable rates. But now, however; you might as well strap on some spiked boots, grab some floss and try to climb Mt. Olympus. The problem here is that the lending institutions are in the exact same place that you happen to be in – scary is it not?

To say that there is no “secret” to the mortgage game is an understatement. Lending institutions always love to keep their inner circles close to the breast. The fear of losing customers is up on the same level as losing money considering, in all reality, it is the same thing! Bankers see people as money signs more than as human beings. This is what got them in the mess they now see themselves in. They looked at people as money and their lending procedures were too relaxed in order to give them mortgages and other loans. If you had a job you had a mortgage if you wanted one. Unfortunately for them they also gave out small interest rates so the mortgage holders spent less money and less principal came off of the balances! When the bulk of the loans came due the mortgage holders couldn’t pay and their houses were taken by the banks.

Under normal circumstances taking someone’s home is a good thing for the bank as they would sell the house; get their money and a dividend on top of that. Too bad they couldn’t foresee a down turn in the employment market which made buying a home an impossible mission so the lenders wind up sitting on several properties that they simply could not unload and their customer’s could not find work to pay them off. This made an interesting situation for the consumer’s who did not meet a demise in the job market. Banks are now trying to give out mortgages left and right at insane interest rates as a way to make a shift in the housing market occur. Now the stars have aligned and the lenders are scurrying like rats on a sinking ship. Believe it or not buying a home in this market is not a good financial move for you.

Like any other endeavor it pays to research! Use the tools at your disposal. The Internet is the greatest tool that you can use. Research your local bank branches and larger companies that may service your area. Get quotes from as many as you can and find out all of their rules and what not. Once you have this information you can put the ball in your court and pit these lenders against each other to haggle down their fees and rates.

Hints for the First Time Buyers

This market is like a lottery with the person just buying a home for the first time. Except in this lottery you are winning instead of throwing your money away. There are plenty of losing tickets in this current mortgage market but as a first timer buyer and mortgage seeker you will not be scratching off the proverbial dud.

Many new buyers are looking at houses on a greatly recessed market so the prices are a lot less than they have been in previous years. A house that is being sold at a savings (or as a “foreclosure”) means that your mortgage will be less than it should have been in a stable, high-priced market. Since the lenders are feeling the crunch too they are lowering interest rates and waiving fees to entice buyers to pick up a mortgage. The type of market exists because there are is vast amount of sellers than buyers and they aren’t selling a property to buy another one and the sale can sail through the process.

Most lenders want you to supply a deposit to the tune of 15-20% for their basic mortgage packages. All of those “in the know” are not predicting a huge fall in the housing markets for the prices to drop that low. What this means for you is that you are not likely to slip into negative equity territory within the near future. Even if you do get in the hole right out of the gate then your only hindrance will be trying to sell your home or attempting to mortgage in the short term.

Hints for Existing Homeowners

Unfortunately this new market is really meant to suck in new customers. Those of you that still own homes are being looked at as a near lost cause so you will be facing an uphill battle with lenders. Remortgaging when you are are in negative equity is a sure way to find yourself being tossed aside.

Of course you are thinking this is not fair and, you know what? It isn’t. Not by a long shot. What can you do though? You are in negative equity, you own your home and the housing market is in the gutter. The fact of the matter is that selling your home in a low market usually means that you will not get enough money from the sale in order to cover what you owe. With this in mind it is no wonder that a lender would have difficulty wanting to take on the higher risk. When a bank decides to give you a mortgage and the house sells you will have to make up whatever the difference is be it one lump sum or in installments. If you want to “stay put” then you will have to pay your lender’s SVR (standard variable rate) when you reach the end of any fixed term deals.

Now if you are a very lucky person and have evaded finding yourself in negative equity then the lenders should not have a problem talking with you. You may need to jump through a few extra hoops than first time buyers but, in the end, you should be able to reap the same rewards and benefits that they have. The most important aspect of these new loan packages is the lower interest rate which can save your mortgage payments from being so high.

Never be Afraid to Ask a Professional

There is no such thing as a bad question when your financial future is at stake. Getting mortgage advice from a source that knows their stuff is absolutely essential in this mortgage market.

You will need to do some digging in order to find the best rates among lenders. Even though they are more apt to give a loan at a good rate does not mean they want their rates known as “frugal”. Talking to an expert, or doing your own thorough research, will allow you to uncover those hidden deals that are more beneficial to you.

Tags: credit crunch, Mortgage Market

This entry was posted on Monday, April 13th, 2009 at 12:58 pm and is filed under Mortgage Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.