In response to the rise in Massachusetts foreclosures and after the sub-prime lender fallout, the Attorney General has imposed new regulations on mortgage lenders, effective January 2, 2008. While many in the industry are not thrilled with the new provisions, it seems that measures were needed to curtail more problems from arising.
One of the new regulations requires loan originators to have a "reasonable belief" that a borrower can afford a loan, based on available information about the borrower's financial circumstances. Now, that's a novel idea, or as my teenage daughter would say, "Duh."
When you stop to think about it, mortgage brokers and real estate agents both depend upon commission sales to make a living. The higher the sales price of the home, the more the agent stands to gain. Similarly, the higher the sales price, the bigger the loan and the higher commission for the mortgage broker or loan originator.
As a buyer, you can thank your friendly real estate agent for helping you to "overpay" for your dream home, as the cost of a commission is added to the seller's bottom line. You may think you don't pay a commission, but you really do. Of course, purchasing directly through the owner helps reduce the chance of overpaying. As a home owner whose taxes continue to increase, just remember how your property valuation is tied into real estate sales in your neighborhood.
One of the new regulations requires loan originators to have a "reasonable belief" that a borrower can afford a loan, based on available information about the borrower's financial circumstances. Now, that's a novel idea, or as my teenage daughter would say, "Duh."
When you stop to think about it, mortgage brokers and real estate agents both depend upon commission sales to make a living. The higher the sales price of the home, the more the agent stands to gain. Similarly, the higher the sales price, the bigger the loan and the higher commission for the mortgage broker or loan originator.
As a buyer, you can thank your friendly real estate agent for helping you to "overpay" for your dream home, as the cost of a commission is added to the seller's bottom line. You may think you don't pay a commission, but you really do. Of course, purchasing directly through the owner helps reduce the chance of overpaying. As a home owner whose taxes continue to increase, just remember how your property valuation is tied into real estate sales in your neighborhood.
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