U.S. mortgage debt has surpassed the 2007 peak. Much of the rise comes from tech-boom cities. Before taking a mortgage, Hometown Lenders recommends its customers evaluate the local market carefully. It's also crucial to understand mortgage basics and calculate affordability.
The average mortgage balance in the U.S. has surpassed 2007 levels by 9.49 percent. Many economists are worried, while others believe the U.S. economy will continue to support even higher housing prices.
Before taking out a purchase loan or refinancing, Hometown Lenders, an Alabama-based mortgage lender with the ability to originate loans in 37 states, recommends its customers become educated on how to use mortgages to their advantage and avoid pitfalls.
In this post, we'll explain the state of mortgage debt in the U.S., how to determine affordability, the pros and cons of second mortgages, and the mortgage approval process.
WHERE DO WE STAND
The 15 states with the highest average mortgage balances are responsible for most of the growth in mortgage debt. Washington, D.C. beats out every state with an average balance of $401,035. That surpasses hyper-expensive California's $347,652. Much of the debt growth is concentrated in states with tech-boom cities.
Real estate prices in Washington State have surged to levels that rival the largest bubbles of the previous decade's housing boom. Young workers have flooded Seattle hoping to score high-tech jobs.
The same technology boom has led to housing shortages in Denver and Portland. Propelled by giant price increases in the tech-boom cities, Washington, Oregon and Colorado have surpassed or caught up to New York State in average mortgage balances.
Real estate markets are local. Some regions have more power to support prices than others. The state of the local economy should always be factored into any mortgage decision. Though real estate prices in one part of a state may be inflated, other parts of the state may still offer down-to-earth prices.
KNOW BEFORE YOU SHOP!
It's easy to fall in love with a home you can't afford. This leads to the temptation of squeezing yourself into an unrealistic budget. The loose lending standards of the 2000s allowed borrowers to mortgage beyond their means by the millions.
People got caught up in a frenzy and forgot to apply two critical ratios that determine home affordability. Had they used the front-end- and back-end affordability ratios, they may have saved themselves from becoming house burdened and facing adverse credit impacts.
Determine this by dividing a theoretical mortgage payment into your gross income. For example, if your target mortgage payment is $1,000 and your monthly gross income is $4,000, then you have a front-end ratio of 20 percent.
20 percent is a healthy front-end ratio. Conventional loans require front-end ratios of under 28 percent. FHA loans cap front-end ratios at 31 percent.
Back-end ratios determine if you can afford the mortgage and your other financial obligations. In terms of affordability, this ratio is the most important. Lenders calculate your back-end ratio by adding the proposed mortgage payment to all of the obligations on your credit reports, such as vehicle loans, credit card payments and student loans.
They then divide this total by your gross monthly income. For example, if your gross income is $4,000, and the total of the proposed mortgage and other payments is $2,000, your back-end ratio is 50 percent.
A 50 percent back-end ratio is unhealthy, and most lenders would reject an application on that basis. Conventional loans require back-end ratios of under 36 percent while FHA loans cap back-end ratios at 43 percent.
THE APPROVAL PROCESS
Lenders consider your FICO score, debt-to-income ratio and income stability. They also evaluate life events, such as previous bankruptcies or foreclosures. Conventional loans require hefty down payments and have strict requirements.
At Hometown Lenders, we make the mortgage approval process as stress-free as we can. We're happy to meet with your family and help you determine the best options. Our experts have access to many loan programs and will do their best to put you in the product that fits your needs.
They also understand the approval requirements, so don't worry. Your home-loan specialist will gather all the needed documentation and manage the underwriting process on your behalf. This leaves you free to focus on important matters like what color you'll paint the new house.
Partnership will push Hometown closer to reaching their Annual Production Goal of $5 Billion
Huntsville, AL - Hometown Lenders, Inc., a national mortgage lender headquartered in Huntsville, Alabama, announced the successful partnership of TotalChoice Mortgage Division, led by Michael Farrell, Divisional Manager. The key decision to transition from a small, regional holding company to a larger company with a strong, National footprint was undoubtedly a strategic move for TotalChoice Mortgage Division.
For Hometown Lenders, the verdict to partner with TotalChoice Mortgage Division was made easy, as it properly aligned with its goal of reaching $5 billion in annual mortgage origination volume. In the upcoming months, TotalChoice Mortgage Division plans on adding production offices in North Carolina, Pennsylvania and Florida. These additions alone will increase the 2018 annual projected loan origination volume by $240 million.
“The goal from the beginning was to build a sales division with exceptional sales personnel supported in partnership with an unmatched back office support,” said Michael Farrell, Divisional Manager. “To expand the TotalChoice vision tooled with ground-breaking technology in the mortgage space, aggressive speed to client closings, and an aggressive weekly compensation to our salespeople. To do so we needed a strong and committed partnership with a national mortgage company who encompassed the resources, desire, and commitment to scale our vision. We clearly found the opportunity with Hometown Lenders, Inc. and we are extremely excited to be members of their family. In my 30 years of lending, I have never found such caring professionals who do business the right way and look beyond the closing to take care of their employees and the communities they serve. Partnering with individuals like Billy Taylor and John Taylor and their team of professionals was an easy decision as it matched our CORE values perfectly,” added Farrell.
As a fully-integrated, multi-channel mortgage lender, Hometown Lenders drives consumer acquisition by leveraging technology; while providing a traditional customer service experience through its brick and mortar locations. Another key aspect of the acquisition was Hometown Lenders ability to assume TotalChoice Mortgage Division’s existing marketing technology. These technologies include the ability start and complete the entire loan process through a mobile app, which allows efficiencies and transparent communication for its borrowers and Realtor relations.
TotalChoice Mortgage has successfully developed customized marketing platforms powered by key technology partnerships to master the origination process. These tech-driven marketing platforms allow mortgage loan officers to convert more leads, automate the loan process, and stay in touch with their prospective clients.
“In today’s market, customers expect more from companies and it’s our responsibility as a business to satisfy the demands of our consumers,” stated Masana Noma, Marketing. “An automated Client Relationship Manager (CRM), that features rapid response to our customer’s inquiry or a mobile application that simplifies the consumer’s task is a must-have tool for businesses. That’s exactly why we’ve carefully built a customized, white-labeled solution through our collaborative partnerships with Big Purple Dot and Pre-Approve Me.”
TotalChoice Mortgage is a division of Hometown Lenders, Inc. (NMLS# 65084), a privately held mortgage lender with locations in Columbus, Ohio, as well as other states. Hometown Lenders, Inc. maintains 37 active state licenses to originate residential refinance and home purchase loans. The company size is approximately 400 employees and focuses on driving a culture of customer-centricity throughout every phase of the mortgage process. Hometown Lenders, Inc. is an Equal Housing Lender. Specialties include Home Loans, First-time home buyers, FHA, Refinance, Mortgage, VA, Conventional, Jumbo, Reverse Mortgage, USDA, Construction, and Renovation.
Since the housing sector shortage has been worsening - a total disaster within the last decade alone - housing prices have only further skyrocketed. This has affected everything; from the number of listings on the market to their very stock quota price, and much more.
In fact, the Washington Post has further added that housing prices soared this year by nearly 10 percent in starter homes and nearly 8 percent in trader homes. Last year's total listings in the U.S. have fallen by another 8.1 percent.
Furthermore, CNBC further notes that this factor alone has indubitably made it far more difficult for one to get a loan. Ellie Mae's, for instance, has already closed its loan applications for the time being. CEO Jonathan Corr mentioned that, what one can drastically expect to see, with rising fluidity, is an unexpected shift from a seller's market straight into a buyer's market. The move is unstoppable. This year's second quarter alone indicates over 700,000 loan applications closed.
Where we come into the picture
Hometown Lenders, Inc. has led the way for many years now, 19 to be exact, and continues to be an industry role model many other businesses seek to emulate. We help people achieve their dreams of homeownership through mortgage financing.
We help individuals consolidate their debt and pay off large bills, as well as reduce their existing mortgage payments by refinancing their current loan. We believe in people before profits. And to address this current housing shortage problem, our plan of attack is as follows: We provide a turnkey lending solution for consumers that need to finance their home purchase or consolidate debt by refinancing their existing home loan.
And you may already wonder what sets us apart from the competition. Our "people before profits" mentality, for one, says it all. The executives of our company created a 501(c)3 organization called Mission Firefly that is almost fully supported by the company.
This NPO conducts ministry work across Central America, mostly focusing on clean water filtration, but touching on all the spokes of the poverty wheel, including, but not limited to, food, housing, education, clothing, medical treatment and spiritual guidance.
So, whether you're a mortgage professional, sales recruit to the HTL team, seasoned military veteran, previous customer, or even first-time loan application candidate homebuyer or seller, we invite you to check us out.
And how do customers primarily reach out to us? Through outbound sales efforts, channel partners, referrals and word of mouth. We find all kinds of means to market ourselves, so that you may know we exist to serve you when the time calls for it.
Visit us and find out more: www.htlenders.com
Hometown Lenders is proud to announce the most recent addition to their team, Major Mortgage.
Major Mortgage is a DBA of Hometown Lenders and consists of 14 branches across 9 states
with a combined annual volume of around $300 million, and that number is growing rapidly.
Hometown Lenders has recently brought on an additional 11 branches that brings the total new annual volume to around $1.4 billion.
This surge in business is a result of Hometown Lenders' aggressive and unique recruiting campaign to put the money back in the pocket of those who make it. We bring our talents together because we believe we can get where we want to go faster and have more fun doing it together than we can separately. One word that we all learned in our childhood summarizes this: share. We strive to have an open mindset, to create an environment for open idea sharing, and keep the accounts open so we can trust but verify.
Major Mortgage represents a significant step forward for Hometown Lenders and a culmination of two years’ worth of hard work coming together in a new business plan. That plan sought to find a better mouse trap and determine what a better mortgage company looked like. After asking builders, realtors, and, most importantly, mortgage loan originators what a great mortgage company looks like, that built the foundation of our new business plan. Out of that business model has come the most successful 13-month run of growth in the history of our company.
"I’m an Auburn University graduate," said Billy Taylor, owner and CEO of Hometown Lenders. "As badly as I hate to admit it, Alabama is a machine when it comes to recruiting. They tend to do more screening at times, while Auburn must get recruits on campus and sell them. Our goal is to certainly have that Auburn family feeling but combine it with the level of success and efficiency that Alabama has when recruiting the top people in the industry."
Since the beginning, Hometown Lenders has used a simple philosophy when growing the company: Recruit the best, Retain who we have, and Remember who got us here.
Recruit the best means we want the best character, regardless of volume or experience. Because if we have someone with great character that is doing what they are supposed to do when no one is looking, then we can grow with that individual.
Retaining the best means we must create an environment where people feel like they are valued, feel like they have a plan toward advancement, feel like their idea matters, and they can retire with a good group of people with common interests.
And Remember who got us there is certainly a reference back to our faith-based company. We are not the morality police, but we do believe that Our Lord has been a big part of our success.
Hometown Lenders would like to thank those who have allowed the most successful 13-months of growth in our history, and based on the current pipeline, we are excited to see what the remainder of 2018 and 2019 bring. As Billy Taylor put it, "Luck happens when preparation meets opportunity. That's how we look at what has happened to us in the last 13 months. There has been a lot of hard work that collided with the right opportunities at the right time with the right people."
“Major Mortgage is run by two brothers, Tor and Ryar Hayward," Taylor said. "These guys are just great, normal, every-day guys that do what they say they are going to do. They are handshake guys that close on time and understand how to build a business and treat their customers the right way. They have built a reputation that their word is their bond, and that is the exact type of partner we look for. It has been an instant upgrade for our company to see how they do things and integrate many of their best practices into our company. We consider it a great honor to partner with the Haywards along with many of the other new branches we have partnered with recently. When Hometown Lenders set the goal to emerge as a national leader in the mortgage industry, we knew we would need the right individuals to help us accomplish the mission. We found those guys in Tor and Ryar and their incredible team of mortgage professionals."
“With the current market compression, the timing couldn't have been better for us to partner
with Hometown Lenders. Their focus on the development of a nationwide presence makes
this a perfect fit for Major Mortgage. This has been a fantastic move and we are looking forward
to all the new opportunities we have with this new business relationship."
-Tor Hayward, President
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