Why all the Paperwork When Applying for a Mortgage Loan?

Home / Real Estate News / Why all the Paperwork When Applying for a Mortgage Loan?

Why all the Paperwork When Applying for a Mortgage Loan?

When applying for a mortgage loan, many homeowners notice how much paperwork is required throughout the application process and wonder why it is necessary. It appears that the bank requires three separate sources to validate each and every application entry.

Many have discussed how buying a home ten or twenty years ago was so much simpler and many are wondering: “What has changed?”

There are two good reasons why the mortgage loan process is more challenging for today’s homebuyers:

1.New guidelines have been provided by the government that require the bank to prove without any uncertainty that a homeowner can afford their mortgage.

During the rise of the housing market, a lot of people “qualified” for a mortgage loan that they could not afford. This resulted in millions of families losing their homes; the government is now making sure that the same thing doesn’t happen again.

2. Banks do not like to take part in the housing market.
For the past seven years, many banks were forced to take responsibility for liquidating millions of foreclosures and negotiating over a million short sales. Banks do not want more properties listed under foreclosures, so it’s important to them to ensure potential homeowners can afford their properties.

Why all the Paperwork When Applying for a Mortgage Loan?

However, there is a silver lining.

When the housing bubble occurred, banks were very strict with paperwork. However, the good thing is that it allowed interest rates to lower to as little as 3.43%, as per the latest report from Freddie Mac.

Those who have purchased homes in the past may have had a simpler application process, but their interest rates were significantly higher as well. A 30-year fixed rate mortgage was 8.12% in the 90’s and 6.29% in the 2000’s.

Bottom Line

While the process of being accepted by the banks may be a long one, homeowners are very fortunate to be experiencing such low interest rates in this market.  Are you planning to purchase a home? Consider these 3 Questions You Should Ask Before Buying a Home to help you get started!

Do you know why buying a home in North Carolina is a great idea? Make sure to read Charlotte, NC: The 3rd Most Attractive Real Estate Market in America! Want to learn more? Call us today at Showcase Realty at 704.997.3794 or send us a message here!

Recommended Posts
Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt

Start typing and press Enter to search

Where is the Housing Market Heading in Terms of Home Mortgage?