The mortgage industry is changing rapidly. Learn why the Big Banks are pulling out of this 1.5 Billion Dollar industry. Who is filling the void? You may be surprised. The best part is it’s saving you money….
I want to share something important with you my dear blog reader. If you’ve spent much time on my website, you no doubt realize I’m making every effort to keep my web visitors informed and current to the market conditions for real estate.
It seems that the Big
Banks are pulling away from home lending. For years I’ve touted that this
would be the best place to go for obtaining the funds to buy a home. I’ve been
a real believer in going to the source for the money.
The market place is changing drastically. The alternative mortgage lenders (or the companies without bank tellers or customer deposits) are getting a bigger share of the $1.5 trillion dollar mortgage industry today than ever before.
The big banks that were once the major forces in home loan industry are starting to back away. They’re telling us that smaller profit margins and higher legal risks are the reasons.
This strikes me as very odd. Let me get this right. These multi-billion dollar banks who received government bailout money to stay afloat now want to pull out of mortgage banking? What is the real reason why?
Here’s one for you, the new alternative lenders have to be completely transparent when it comes to disclosing fees because of the new regulations put in place since the financial meltdown in 2008. Yet the big banks do not have to be as transparent. They can hide fees that loan brokers have to disclose. So the customer can shop smarter because of this favoring the mortgage brokers over the big banks.
So what’s happening is the alternative lenders (brokers) are embracing technology and doing all the business online. The process of getting a home loan is so streamlined now it can almost be completely done online. They do not need big bank branches with high overhead to pay in order to keep the doors open.
Alternative Lenders Are Middlemen
How do I know this? Well for one thing, some of my most recent customers I’ve helped to buy a house never walked into a bank at all. They applied online for their financing and the loan officer talked with them on the phone and helped them finish the process. Everything was done electronically.
Because of this technology, other companies have started to fill the void left open by the banks. Many of them are testing new business models and improving the process of getting a loan to buy a home or refinance it.
Many of these online brokers are helping people shop for the best loan product and even guiding the credit challenged customers to navigate the process to improve their credit scores.
As a result of this, the whole mortgage process has been sped up and now we’re seeing faster approvals and easy ways to shop for a mortgage.
Have you heard of the Rocket Mortgage? Quicken Loans is one example. How about Lending Tree, do you see them on just about every website you visit? Chances are if you ever clicked on one of their ads on a website, they set a tracking pixel on your computer and are aggressively getting in front of you everywhere you go on the web.
I once referred my web visitors the Lending Tree. I was sending them over 200 loan applications a month from my web site. Then one day they decided to end our referral relationship with me and not do business anymore. They have done such a good job of remarketing to people using these tracking pixels, they can go more direct to the consumer and not advertise on my website.
Mortgage marketplaces, like LendingTree, Mortgage Hippo, Zillow and eLoan, are lead generators for loan originators. Here's how that works: Their mortgage rate algorithms take your basic application info and present you a roster of potential lenders. You choose one, or several, of the rate options, and the referring marketplace site receives a fee for the lead. You then complete the process with the lender.
That kind of near real-time approval is an example of how radically the mortgage process is changing. Next-gen lenders strip away layers of delays built into the old system by using automated loan-decision algorithms, electronic document gathering and secure online communications.
So Now What?
Alternative mortgage lenders now account for almost half (45 percent) of all home loans, according to the Federal Reserve "the largest share in 20 years”. These originators are transforming the mortgage loan process with faster approvals plus online application and document processing, and they are powering a more competitive market.
So since I no longer refer my web visitors to Lenders who once paid me for sending them customers, I’ve joined the revolution in my own little way and offer free personal coaching to help people navigate the process of finding grant money, a mortgage, the real estate search and purchase of that new home.
Why I even guide people that may have credit challenges. And the best of all, I do not charge one thin dime to help them.
The Rest of The Story
Almost half of the 15,000 – 20,000 website visitors I receive every month are looking for grant money. The vast majority of first time home buyers need help with the down payment and closing costs. They may have some money saved up but the down payment is still the major barrier to purchasing a new home.
So I help people find the grant money offered by their state HUD agency, apply with a lender who works with the grant programs, and then find a realtor that is good at working with the first time home buyer. I hold their hand from start to finish.
This new business model has given me a whole new look at helping my web visitors get the education they need on the home buying process and achieve their goals of home ownership.
So if you’re a first time home buyer that is just getting started in the process, why not considering let me help you? It’s real simple to get started. Just click on this link and fill out my simple online form and I will respond to you by text, email and yes even a phone call.
In no way is the estimate generated from this closing cost calculator meant to serve as a Good Faith Estimate or GFE. By law each lender you talk with is to provide you with a GFE to give you a more precise estimate. The final HUD-1 closing statement received at the end of the transaction will give you exact costs.
This calculator is intended to help you get a general idea of the amount of money needed for your down payment requirement and closing costs.
Do not consider this an offer of credit. This is only a general illustration of typical mortgage terms offered by most lenders. You will need to contact a specific lender to help you understand the different mortgage products and to determine your eligibility for any mortgage products.