Lifestyle has changed! In this millennial era, debt has many names. One of them called “mortgage”. So in this article you will read another insight about it. If you haven’t been reading about the “subprime lending meltdown” lately, you’ve had your head in the sand because this thing has pervaded every corner of the financial world and chances are it has touched you in some way.
So Here Are The List of The Impact
In fact, the other day I was talking to someone and it turns out that American Home Mortgage held his mortgage loan (AHM recently laid off 90% of its workers) so the subprime lending meltdown certainly touched them in a very palpable way (In fact, they were one of the folks who had their escrow check bounce when paying their taxes).
Another friend had to jump through hoops in terms of documentation, specifically the gift letter, and even had one lender pull their loan offer when they were looking for a home. We’re talking financially responsible, high credit score individuals here; not what you would associate with a subprime lender. The tentacles of this thing have spread everywhere and everyone is spooked.
Here’s another impact… If you were looking to get a jumbo mortgage loan, a loan greater than $417,000, then you’ve been affected too because those rates have spiked since Fannie Mae and Fannie Mac don’t buy jumbo loans. Instead of paying something like 6% you’re talking about paying a minimum of 7.5% to 8% – that’s a significant impact especially considering it only affects the more expensive loans. The reason for this is simply because you would be getting a loan that Fannie Mae and Fannie Mac won’t buy, so lenders are scared (but not so scared they won’t lend you money of course).
Who Does Not Get The Impact
Personally, it hasn’t really impacted me because my mortgage has been pretty vanilla, a 30 year fixed mortgage at around $230k. The only noticeable impact has been in my retirement assets because they’re mostly in index funds and those funds gave a little something back last week.
So I’m interested to know, has the subprime meltdown affected you or someone you know? I’m curious to hear how widespread this has truly become.