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Mortgage Shopping: Competition in the Market is Forcing Lender to be Creative
by Gabriel Traverso
CMR Columnist
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Most of the mortgage business lately--over 60% in January-- has gone to consumers with credit scores of 650 or higher. These homebuyers often choose fixed-rate home loans, which has forced lenders to get creative.
The Competitive Nature of the Mortgage Business
With competition getting stiffer for mortgage lenders, this could be an excellent time to shop for a new home loan. Most lenders simply don't make much on a traditional fixed-rate loan. The bigger money is in alternative loans like adjustable rate mortgages (ARMs) or interest-only loans. So what are some lenders doing to sell home loans?
Washington Mutual is offering an attractive home loan option called Mortgage Plus, which allows homeowners to switch their mortgage from a fixed-rate home loan to an adjustable rate mortgage without having to go through a refinance.
Bank of America has come up with a mortgage product called the No Fee Mortgage PLUS program, which applies only to new home loans. This mortgage saves consumers on origination fees, application fees, and even title insurance.
The Credit Union National Association has come up with a new product called the Home Loan Payment Relief loan. This mortgage is very similar to an ARM with a three-year introductory rate one-percentage point below the national average. After the initial term, the loan resets but only goes up to the national rate average at the time the loan was signed.
More Mortgage Options
What does this mean for you? It means you need to shop around when looking for a new home loan! Don't think you need to take the first attractive offer. Check with several lenders in order to find the mortgage that works best for your needs.
Sources
CNN Money
About the Author
Gabriel Traverso is a freelance writer, professional musician, and artist. He resides with his family in Reno, NV.
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