Black homeowners have long faced extra obstacles when buying their homes. And in the turbulence of 2020, barriers to Black homeownership rose yet again. When the mortgage lenders tightened their approval criteria, it turns out that more minority applicants were turned away.
What’s more, Black applicants who receive loans are still paying more in interest than other mortgage holders. What’s going on here? Let’s take a look.
You might be wondering about that house or condo you’ve left
in your will. Often, after a homeowner passes on, the real property is sold
from the estate to pay off debts. But maybe you have a relative who would like
to have and keep your home.
For the sake of exploring the question, say you still owe a $50,000
mortgage balance when you pass on. Of course, you could leave your beneficiary
enough money to pay your loan off, if you are financially able to do so. Or you
could pay it off early yourself.
But if you need to pass the home on with a mortgage, can
your beneficiary just keep your house or condo, and pick up the monthly mortgage
payments where you left off? At least the next owner would have a head start —
inheriting your home equity, and just paying what’s left on the balance.
Be sure you’re dealing
with a company that takes service seriously.
Various companies are involved in one mortgage. The home
buyer’s journey might begin with a local mortgage expert. Then, the mortgage
expert helps the buyer find a lender. Once the loan is approved, a borrower
gets a mortgage servicer, too. Some lenders service their own loans, but many
You might be familiar with your mortgage servicer as the
company that posts payments to your account, which you review online from time
to time. Your mortgage servicer is the company that keeps money in
escrow to pay your local property taxes and your homeowner’s insurance
premiums. To pay more each month against your principal, you visit the mortgage
servicer’s website. Mortgage servicers can help a borrower through forbearance,
or work with a borrower to remove private
mortgage insurance from an account. Mortgage servicers also report
their borrowers’ payment activity to credit bureaus.
In short, mortgage servicers are a big part of a homeowner’s
life for years. Customer service is crucial.
Congrats to the 2020 and early 2021 buyers who locked in fabulously
As the economy gradually pulls itself out from under the
pandemic, people are talking about interest rates rising in 2021 and beyond.
While rates will fluctuate, the overall trajectory is on an upward climb. Yet
some new mortgage holders will keep those great mortgages on their homes even when
they refinance or sell, thanks to assumable loans.
An assumable loan is a perk of federally backed mortgages.
It allows the loan terms to stay on the house, even if the title changes names.
The loan is ported from the original borrower to the next title holder without the
creation of a new loan. The new homeowner picks up the monthly mortgage payments
where the original borrower stops.
As co-insured parties, you and your mortgage lender both
have a stake in the value and condition of your home.
Your stake in your property value is obvious. But the lender
also has a vested interest. Your home’s value is the collateral for the loan. So,
catastrophic damage raises serious questions about the status of a mortgage (or a
deed of trust).
If an unexpected calamity damages a home, here’s what buyers and owners should
know about the interplay between the insurer and the mortgage company.
It’s now obvious: the mortgage lending industry is forever changed.
Here’s what happened — and what’s likely to come next.
The Year of Minimum-Risk Lending
Back in April 2020, we noted that mortgage lenders were getting tougher on loan applicants. Perversely, the borrowers who stood to benefit most from the low interest rates that led to a refinancing boom were the ones who faced the highest barriers to access. Lenders scrutinized any changes in applicants’ work lives, income and credit profiles, looking for signs of instability.
Banks are traditionally uncomfortable with non-salaried applicants and volatile income streams. Without a continual stream of W2 wage income, applicants are often considered too risky. Some mortgage companies simply stopped working with applicants outside the Qualified Mortgage (QM) category in 2020. Even the companies that had, pre-pandemic, used their professional discretion to help viable borrowers. Even the ones that specialized in out-of-the-box loans.
What if a potential buyer is interested in acquiring a part
of your property, and you’re willing to sell?
If you’re a land owner with full rights in a piece of
property, you may legally sell any part of it — unless bound by an agreement to
the contrary. If a parcel is mortgaged, an owner may not subdivide parts to
sell, thereby shrinking the loan collateral, without the lender’s approval. A
homeowner who attempts to sell mortgaged property without the lender’s
permission invites the risk of triggering the loan’s “due
on sale” clause and having to pay off the full mortgage.
Thus, to transfer title to a part of a property, the owner must
first receive a partial release of mortgage. This instrument allows the
sale of a section of a property, free and clear, yet keeps the mortgage on the
How does the partial release process play out? In this
article, we boil it down to a few key elements. We also offer some contextual
questions to consider. By examining the context of a potential sale, a
potential seller can avoid serious losses in value.
Especially for first-time buyers, getting to know who’s who
in the loan process can be complicated — even surprising! First you meet the mortgage
broker. Soon, other actors emerge. As your broker interacts with them, the