My wife and I have become fans of the HBO series, "Boardwalk Empire". Set in Atlantic City during the Prohibition Era ... the action, plot, characters, and scenery within this series are rich, complicated, historic, entertaining, and sometimes downright brutal.
Now I bet you're wondering, "what does the "Boardwalk Empire" series have to do with Mortgage Lending?" Let me try to explain ...
Recently I wrote a blog about 97% Conventional Financing once again becoming an option for Buyers to consider when purchasing a new home. An option that might be especially attractive to someone hoping to avoid FHA's recent rise in costs ... or FHA rules regarding Condominium projects.
The comments I received regarding my post were generally positive. But a few commenting seemed a bit fearful that this Mortgage Program's low down payment requirement could be like re-opening a "can of worms". Their fear was: Low down payment = little "skin in the game" for new Buyers. Little "skin in the game" = increasing likelihood of default or future foreclosures. All that = Here we go again!
Personally, I think the current stricter Underwriting Regulations address much of that worry. It's simply not as easy to choose or be placed in mortgage programs that are risky now. Typically I hear the complaint that Underwriters and Lenders are TOO strict, not the opposite.
This is where a scene from the show "Boardwalk Empire" comes into play. I believe the scene proves a point and is a great analogy for the 97% Conventional Mortgage Program and its use (as well as other Mortgage Programs).
In the scene I refer to, one of the show's characters is sitting in his garage workshop. He's surrounded by handyman tools of all kinds. In walks another series character. A conversation ensues between the two men in the garage. Then an argument breaks out. Fearful of what actions his visitor might take or what he might say or reveal to others, the first man picks up a large wrench, hits the other man with it and kills him.
But here's my question ... is it the tools fault that it was used so cruelly or incorrectly? Or is it the fault of the man using the tool in this manner? I believe it's the man's. His faulty decision to utilize the tool in the manner he did is the culprit, not the tool itself.
The same can be said for Mortgage Programs. They are options to be considered. There's good, bad, helpful, and less positive aspects for each to be measured and weighed. That's the responsibility of a Mortgage Lender. A good Lender knows the Mortgage Programs they have at their disposal and all the differing features of each Program. And they know how they pertain and will work/not work for their clients and their financial scenario.
A Mortgage Lender has a responsibility to present available options to their clients. To explain and discuss the pros and cons of those Programs thoroughly, so their clients understand them and can make an educated decision as to which Mortgage Program they'll utilize for their financing. Any Mortgage Program can potentially be a wise/unwise choice and can be utilized for good/bad results.
A Mortgage Program is just a tool. Used properly it completes a task successfully and builds a sound financial future. Used improperly, and work remains to be completed or repairs will be needed.
I believe the analogy I relate using "Boardwalk Empire" proves just how vitally important it is for them to have done their research and homework when choosing their Mortgage Lender. How important it is for clients to be educated and totally involved in the direction/choices made within their mortgage financing and processing from beginning to end.
If clients do their preliminary homework well, they'll have the benefit and knowledge of an experienced Mortgage Lender at their disposal throughout their transaction. A Mortgage Lender that has a fully-equipped tool box of mortgage options for them to consider, choose, utilize, and to benefit from.
* Want to discover the financing options available to you when you Buy or Refinance your Chicagoland home? Contact me! I'll put my 36+ years of mortgage experience, knowledge, and expertise hard to work on your behalf. Together we'll find the best Mortgage Program for your personal financial scenario.
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