According to a recent survey of mortgage executives, too many eligible borrowers are under the impression they would not qualify for a home loan. This misconception is causing such borrowers to avoid even looking into a mortgage application.
Part of the reason for this misperception has to do with the tighter lending standards that were the norm in the aftermath of the housing market collapse. The new regulations issues by the federal government, in addition to the actions taken by individual lenders, have been a reaction to looser standards that allowed too many people to take out home loans they could later not afford.
There are multiple reasons why potential homeowners believe they will not be able to get a home loan. Another reason for this issue has to do with media reports that tell the tale of a U.S. economy still in struggler. With reports of a weaker economy that still has not fully recovered from the recession and housing market collapse, potential borrowers believe that it’s just not a good time to seek out a home loan.
It falls on the shoulders of lenders to do some education for those borrowers to explain how the process works and to bust through some of the myths about qualifying for a home. The goal of private mortgage lenders is to help as many borrowers as eligible and possible officially become homeowners.
One key way the industry can do this is by explaining how the process of obtaining a mortgage will work for various applicants. If the market continues to stagnate, news reports about a lack of recovery will only continue, further discouraging potential buyers from taking action. In order to break this cycle, it is essential that lenders reach out to these individuals and explain the benefits of owning a home as well as the basics of the process.
Many of the potential homeowners reporting that they think they will not qualify are indeed interested in owning a home. In fact, among those who are renting, the interest in switching to owning a home is there, but they may not be aware of how to get started.
Clearly communicating the benefits of owning a home is a great way to introduce potential buyers to the mortgage lending process in a meaningful way that translates to current interests and future advantages, too. Successfully reaching out to these potential homeowners could significantly change the tide of current purchases and especially help first-time buyers celebrate a major and exciting purchase. Individual lenders should be prepared to meet potential buyers where they are at and provide valuable information about qualifying to buy a home.