by Calvin Hollie
Generally, when most people are looking to refinance their home mortgage, purchase investment property or start a business they tum to their local bank. The basic thought is that because I keep my money in XYZ Bank they should be willing to lend me money. After all I have been banking with them for over 10, 20 or even 30 years. While you would think that your bank or credit union would be just as loyal to you as you have been to them, the fact is, in the banking world lending money is a business. And in bu
siness you always want to limit your so-called risk and maximize your return. That my friend is the way most banks look at us, how much of a risk you or I will be.
Unfortunately, for us African Americans, getting approved for the financing we both need and want is extremely difficult. In fact, according to Investopedia.com, in 2017, banks were twice as likely to provide business loans to White entrepreneurs than their Black counterparts. Conversely, they were also three times as likely to follow up with White applicants than with more qualified Black Business owners.
Not to mention the challenges we face when buying a home or re-financing a current mortgage. According to an article published in the Washington Post dated May 23, 2018. In 2017 while overall about 1 of every 9 loan applications (10.8%) to purchase a home – and more than l in 4 applications (26.4%) for a refinance were denied. What’s even more alarming is that the overall rate of denials of mortgage applications for Blacks was 18.4 percent in 2017, with 13.5 percent for Hispanics and 10.6 percent for Asians. For non-Hispanic Whites, it was only 8.8 percent. Conventional home purchase loans Black applicants received denial 19.3% of the time, and 39% Black applicants were denied a refinance loan. Which begs the question, “So why should I even try to get a loan?”
For the most part most of these denials can be attributed to a couple of factors such as:
1.A weak borrower’s profile.
2.Lack of knowledge of the mortgage and financing process.
3.Choosing the wrong type of mortgage product.
And that’s where a trusted mortgage or financing expert can come in. A mortgage professional can help if you want support sifting through mortgage options, pinpointing the best rates or overcoming unique borrowing challenges. Although you can shop for a mortgage on your own, a mortgage broker acts as a proverbial matchmaker to connect you with the right lender for your financing needs.
Before heading to your local bank, here’s what you need to know about working with a mortgage broker or financing professional.
Next: Part 2 -Conclusion