So often in our world of immediate gratification, we find that we are burdened with expectations well beyond what one would consider normal. It would not be reasonable to drive your car at an ever accelerating speed without slowing down from time to time. It would be reasonable to to use the brakes, perhaps yield to another vehicle, and yes you may even make a wrong turn here or there. You may also have more than one car in your garage. The old reliable family car, a new car, a business vehicle, or even a sports car. Each would have been purchased for a specific reason at a certain time. Times change, and sometimes, we are left to make adjustments.
There are a lot of similar things that have happened in lending industry during the past few years. The industry was speeding down the road to record sales and devising new ways to satisfy an ever growing desire to creatively finance loans for buyers that didn't quite fit in the traditional box. The excitement shared by the buyers , sellers, lenders and professionals in their related fields caused for some to make decisions that they may not have ordinarily even considered. I am not addressing fraud,as that is always wrong. I am more inclined to say that many chose to stretch their budgets beyond their limits in the hope that prices would simply keep going up. Inherently, we find that it is not always reasonable to find that prices always go up, but are rather cyclical.
My forecast for the industry is cautiously optimistic. Rebuilding will be done one block at a time. Little victories each day will gradually add up to a much stronger industry, with stronger core principles. Fully documented loans will earn the best rates, and those that are more risky will incur a higher cost based on that risk. It is a fair system when applied evenly among all borrowers. The trend toward government loans will continue to lead us toward increased standardization of lending practices. Ultimately, the consumer will benefit from greater understanding of the lending process, and better service from lending professionals.Written By Ron Wysocarski @ First Horizon Home Loans. Ron can be reached at 386-562-2651.