An Online Mortgage Application Made Easy
During a time when more and more families are losing homes to foreclosure, home mortgage experts are offering new tools to help homebuyers avoid making the same harmful mistakes.
- One new Web site will let buyers to search for the lowest mortgage rates without providing their names or talking to lenders.
- Another site, meanwhile, has added a tool to gauge the risks and benefits of adjustable-rate mortgages.
- An industry trade group is offering consumers some basic guidance for obtaining a mortgage.
Homebuyers have run into trouble because of the growth of adjustable-rate, bad credit mortgages - high-cost loans to borrowers with impaired credit. Now, many are stuck with soaring payments they can’t afford.
More than 2.2 million borrowers who obtained a bad credit home loan will lose or already have lost their homes to foreclosure, according to a new report by the Center for Responsible Lending.
As a result, it’s more imperative than ever that buyers need to be sure they understand the risks of the specific mortgage they’re obtaining.
“We all get a little smarter, at least in the short run,” says Kathleen Keest, a senior policy counsel at the center. “But how long we retain the lessons is another matter.”
That’s one reason some companies say they’re trying to provide more and more consumer-friendly information.
“Many homeowners could have qualified for a better loan,” says Gerri Detweiler of FreeRateSearch.com, a new mortgage site.
“Our goal is to get new borrowers the info before they talk to a mortgage lender, so they’re not convinced that they should buy something that they don’t need.”
The new service will search through thousands of mortgage loan programs, ranging from those for people with perfect credit to those with non-prime credit.
Consumers can go through the search and find a loan they like, without any hidden markup. Then, if they want, then they can ask to be connected with a home loan lender who will match the rate.
FreeRateSearch.com makes money from advertising on its site, and it will receive a fee if it matches a consumer with a home loan lender.
The increase in adjustable-rate mortgage financing has prompted Lending Tree, which helps consumers shop for loans, to launch ARM Central on its Web site. The service will offer data about what happens when ARM rates are “reset.”
More than $1.5 trillion of ARMs will reset before the end of the calendar year, says the Mortgage Bankers Association. That means that a home loan rate that originated in 2003 for 4 percent could rise to 7.5 percent.
Meanwhile, a recent poll conducted for the American Institute of Certified Public Accountants found that a surprising 41 percent of Americans feel they can’t afford to buy a home.
The institute reminds buyers that if they can’t afford a down payment equal to 20 percent of the home’s value, their loan will require mortgage insurance.
SOURCE: USA Today