Matching housing loans with the right property

Big or small, lenders need to follow proper business rules when dispensing housing loans. But are the various home buyers that you are interacting with prepared for the size of the loan required to get the type of property they want?

That might not be the case for those who receive so-called "jumbo loans." These are loans that are too large to be guaranteed by Fannie Mae or Freddie Mac. The limits are higher in expensive markets such as major cities, but borrowers still often need to turn to jumbo loans.

Even though buyers are probably aware that any major city will be an expensive place to live, they might still have trouble paying back such large mortgages.

The Journal spoke to Jonathan Miller, who heads a real estate firm in New York and describes the escalating prices on smaller residences in the area. The handling of these properties depends greatly on what the general and normal standards of competition for the area is like.

"There have been sales of one-bedroom units priced from $2 million to $3 million that are neighbors with family-sized units selling well above $20 million," he said.

The Washington Post described a recent increase in the average interest rate for fixed-rate mortgages, which reached 4.4 percent. The source notes that this was expected after recent warnings from the Federal Reserve, and that mortgage applications actually decreased last week.

Application processing software can protect lenders in situations where the amount of money on the line is larger. Using this solution can mean that your business has a chance to evaluate the strength of a loan candidate and avoid proceeding with a package that they aren't ready for.

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