House the Mortgage Coming Along?
In the years following the burst of the housing bubbles, borrowers basically had to offer up their first child as collateral if they wanted to take out a mortgage. Nowadays, the requirements are still pretty tough, especially for those whose credit isn’t in good standing, but some regional lenders are mortgage issuers are starting to ease up on that. Various banks and credit card unions are are offering financing that is similar to that available during the housing bubble which lead to trouble for many borrowers.
For example, piggyback loans are back, meaning borrowers can take out two mortgages at once so they can avoid private mortgage insurance that is mandated on mortgages valued at more than 80 percent of the home. According to Guy Cecala, a publisher at Inside Mortgage Finance magazine, “We are starting to see some loosening, but it’s very specific. It’s just in its infancy now, and it’s not the type of piggyback loans or low down payment loans that we saw before.” While there were many complex and undeserved loans offered to borrowers during the housing boom, Mr. Cecala notes that the loosening is reasonable right now, but that may change in the future, depending on how far companies are willing to go to attract borrowers.
Written by Kevin Zhang