Understanding Home Loans

Author Matthew Amster-Burton posted an article, titled “Understanding Home Loans,” with a humorous take on the current state of the mortgage industry.  His posting offers clear insight to anyone who feels overwhelmed when trying to understand what different home loan options are available. Do acronyms like “FHA,”  “5/1 ARM” and “7/1 ARM” inspire a mental haze?  Don’t feel alone. Ever since the collapse and current recovery of the housing market, there has been confusion on what loans are and aren’t currently available to prospective homebuyers and those looking to refinance.  Many people fell prey to sub-prime loans that littered the market over the past 5 or so years.  Lenders strayed from traditional practices as demand for loans grew amongst high-risk borrowers with less-than-great credit ratings.  Borrowers were happy because they were living the American dream (or so they thought) of owning a home and lenders were heavily profiting off of each transaction.  Lenders began to package these loans and sold them as Mortgage-Backed Securities-MBS’s (another acronym for you) to leading banks.  However, housing prices began to fall, homeowners defaulted on their mortgage payments and banks began to incur heavy losses on once rosy MBS’s.  And so the subprime crisis began.

Good news is, a lot has changed since then.  Due to government overhaul, mortgage brokers have returned to more traditional lending practices. Amster-Burton quoted Frank Ruzicka of Cornerstone Mortgage regarding mortgage options. “In terms of products available, it’s very old-school at this point. Gone are the crazy things.  You don’t see the pay-option ARM’s anymore.  You’re not doing subprime lending anymore.”  Check out the rest of Amster-Burton’s article to see what’s available for all you loan shoppers out there…  And while on the topic of loan shopping, according to the US Department of HUD, William Raveis Mortgage falls in the top 1% of all lenders nationwide, offering a full array of loan programs for you to choose from.  During the housing crisis, our mortgage company took great care in maintaining exceptional ethical standards and did not participate in sub-prime lending.  Take a look at raveis.com for more information.

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