Few words are scarier to a homeowner than the word “mortgage.” While terms like “broken plumbing” or “property taxes” are also menacing, they don’t quite carry the punch of that monthly mortgage bill. The mortgage bill takes the biggest bite out of an income, and it’s the one bill that needs to be paid each month for the next 15, 20, 25, 30 years, no matter what. Leave it unpaid, and you start playing the risky game of catch up or, worse, you’re on the road to foreclosure.
Thinking back to the first house my husband and I bought, I realize now how naïve we were and how little we understood about the whole process. We simply put down a deposit, signed tons of papers and accepted all the choices made for us. We didn’t fix errors on our credit reports first or shop around for the best insurance policy rate as we should have. We just signed on the dotted line and began paying the monthly amount due, which, at the time, was hefty for us as a young, newly married couple in the middle of a relocation. I can personally testify to the fact that overextending on the mortgage directly impacts a couple’s stress level.
That was back in the ‘90s. Fortunately, my husband and I have somewhat “grown into” our mortgage payment. I now see that in their haste to sell, the developer and the lender looked the other way at times and weren’t as strict as perhaps they should have been when qualifying us. Hindsight being 20/20, it might have served us well to wait a few years and organize ourselves a little bit better before making the big jump from renter to owner.
It’s true that many people are turned down by lenders on a daily basis, but there are many more who are approved for mortgages that might be a little too much for them to handle financially. Once a homebuyer has signed on the dotted line, there’s little a home owner can do to get his head above water without losing money or many nights of sleep. So, when the mortgage industry decides to tighten the grip and strengthen lending requirements, it’s good news for everybody. It means fewer people will bite off more than they can chew, and it means lenders will hopefully deal with fewer foreclosures as a result.
Fortunately, this industry is headed for an overhaul. In our cover story on pp. 34 – 39, we talk to mortgage professionals who discuss the changes ahead, how homebuyers will benefit and how Realtors are a key ingredient in the mix.
Also, take a look at our “You Tell Us” reader poll, where respondents sound off on the relation- ship between mortgage professionals and agents (p. 44). You, too, can sound off on any issues of interest to you or our readers. Feel free to email me at email@example.com anytime. Happy reading.