Previously, we discussed why Americans are more confident in the housing market than they were in past years. Delinquencies and foreclosures are down, which is one reason why the people’s confidence has risen, but why exactly are they down?
There are three main reasons why foreclosures and delinquencies have decreased in recent years:
- Kansas City mortgage companies are careful about who they lend money to
- Qualifications and guidelines have become stricter
- Homeowners are becoming more educated
Mortgage Companies are Careful about Who They Lend To
Since the economic crisis of 2008, Kansas City mortgage companies have been stricter about who they lend money to. What triggered the recession was a combination of borrowers who could not afford a mortgage and some mortgage companies giving it to them regardless.
Since then, the federal government has been cracking down on companies that took part in unscrupulous activities during this time such as:
- Concealing risks from investors
- Misleading borrowers about mortgages
- Lying about losses
Thus, mortgage companies are making sure to follow new guidelines. As a result, it becomes a harder to get a loan.
New Qualifications & Guidelines Makes Getting a Loan Harder
New mortgage guidelines designed to prevent lender abuses make it harder now for borrowers to qualify for a mortgage. According to Bankrate, lenders will be required to ensure that borrowers can repay their loans and in return, lenders will be protected from lawsuits as long as they issue mortgages that follow these guidelines.
These qualified mortgages are designed to be safer and easier for borrowers to understand. It also helps that homeowners are becoming better educated.
Homeowners are Educating Themselves before Applying for a Loan
New homeowners are becoming more informed and educating themselves before applying for a mortgage. With the rising awareness of predatory lending and their rights as borrowers, potential homeowners know what to be aware of and what the correct application process is.
With better education, homeowners know how much they can or cannot afford as well as taking advantage of homebuyer programs.