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Bank-held mortgages on the rise

On Behalf of | Oct 6, 2016 | Residential Real Estate |

According to a Sept. 27 report by the Urban Institute, banks are starting to offer more home mortgage loans. This may be good news for California residents who are considering purchasing a new property.

From January to June 2016, bank portfolio loans experienced a 34 percent growth of all originations. These bank-held mortgages are providing banks with better returns, which seem counterintuitive considering all the resources and time that they must spend on underwriting. However, since the housing market crisis, banks are benefiting from the surge of refinancing applications.

This is in sharp contrast to the years from 2004 to 2007 when banks did not have to spend much of their time and money on underwriting. However, they kept their rates as low as they could because they were competing with other banks to attract customers. When this occurs, the housing market becomes stronger, which is less burdensome on taxpayers.

For many people, a home is their largest investment. Therefore, choosing a residential property to purchase is a major decision, especially for first-time buyers. Besides the financial aspect of obtaining a loan and paying it off, there are many details involving real estate transactions in the state of California. In fact, just one small typographical error or oversight in the paperwork can have major consequences. This is because the California Real Estate Law and Transactions are complicated and hard for most homebuyers to decipher on their own.

When it comes time to make decisions regarding contract terms, title issues, real estate closings and other realty matters, first-time homebuyers might consider speaking with an attorney. A lawyer could also provide guidance regarding counteroffers, disclosure documents, foreclosure purchases and zoning issues.