Why Is There So Much Paperwork Required To Get A Mortgage

Dated: 12/05/2017

Views: 94

Image title

Why is there so much paperwork mandated by the lenders for a mortgage loan application when buying a home today? It seems that they need to know everything about you and requires three separate sources to validate each and every entry on the application form.

Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.

There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

1. The government has set new guidelines that now demand that the bank proves beyond any doubt that you are indeed capable of paying the mortgage.

During the run-up to the housing crisis, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again.

2. The banks don’t want to be in the real estate business.

Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.

However, there is some good news in the situation.

The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate around 4%.

The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process, but also paid a higher interest rate (the average 30-year fixed rate mortgage was 8.12% in the 1990s and 6.29% in the 2000s).

If you went to the bank and offered to pay 7% instead of around 4%, they would probably bend over backward to make the process much easier.

Bottom Line

Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.

Blog author image

Gillian Cunningham

Gillian Cunningham’s name is synonymous with true professionalism, extraordinary knowledge, exceptional customer service, strong work ethic and high integrity standards. Gillian’s personal approac....

Want to Advertise on this Site?

Latest Blog Posts

Collin County Construction Outer Loop

CONSTRUCTION SOON TO BEGIN ON NEXT PHASE OF COLLIN COUNTY OUTER LOOPCollin County is currently acquiring the right-of-way needed to extend the Collin County Outer Loop. The next phase is scheduled

Read More

Construction Soon To Begin On Next Phase Of Collin County Outer Loop

Collin County is currently acquiring the right-of-way needed to extend the Collin County Outer Loop. The next phase is scheduled to begin in early 2019 and stretches between the planned northern

Read More

Feb 20 2018 32065 1

NEW CONSTRUCTION EXPECTED TO START IN 2018 ON POLO RIDGE RANCH COMMUNITY PLANNED FOR KAUFMAN COUNTYEarlier this month, at a council meeting, the City of Mesquite approved a plan for a new

Read More

Hot Home Colors For 2018

We are loving a couple of them!  Behr's "In the Moment" reminds us of the beach (I think we're missing the beach).  Also, PPG's "Black Flame" for a front door.  Super excited to

Read More