Mortgage pros improve loan quality
The bursting of the U.S. housing bubble was a key component of the 2008 financial crisis and has led to changes in the mortgage industry. "As compared to last decade, today's mortgage lenders adhere to stricter loan approval guidelines and spend more time with compliance and quality control on every loan submitted for approval," says Dan Green, loan officer with Waterstone Mortgage in Cincinnati and blogger at The Mortgage Reports.
"These changes have improved loan quality nationwide, which supports the broader U.S. economy," Green says.
For consumers, mortgage industry changes have resulted in higher loan costs, along with longer approval timelines. While "quick closings" still occur, they are much more infrequent than before 2008.
"Today's laws have mortgage underwriters performing verifications that weren't required 10 years ago," Green says. "The extra steps take extra time, which is why buyers should allow ample time for closing."
The mortgage lending basics remain the same. For the best mortgage rates, homebuyers still must show strong annual income, good credit scores and a history of on-time payments. "For homebuyers on the fringe (today), there are fewer loans available and less room for common-sense exceptions," Green says.