After the recession and financial crisis started in 2008 and in the wake of spiking national debt spent in recovery efforts, many Texans and other Americans are losing faith in Banks and are looking to other solutions to satisfy their borrowing needs. As guidelines and requirements tighten and close doors around small lenders and Brokers, new doors open for less conventional lenders — big companies like Wal-Mart and Ebay are predicted to start offering mortgages in the not-too-distant future.
As a leader in mass retail and low-cost leader, nearly a third of the people open to non-bank mortgages said that they would be comfortable with Wal-Mart as a mortgage lender. Nearly half of the people open to non-bank mortgages said they would be open to loans from the online payment company, Paypal. Does this open the door for a new breed of lender?
Chances are that even corporate giants like Wal-Mart, Amazon, and Costco are no match for the current direct lenders (Fannie Mae/Freddie Mac/Ginnie Mae). The sheer size and volume of loans delivered and bought by a group like Fannie Mae allows them to offer extremely low risk and low price mortgage rates — a low price guarantee even Wal-Mart wouldn’t want to offer.
Of course, it is merely speculation that these companies would try their luck in the lending business, as it is a big step off the path of their business models, particularly for rates of returns that could still attract home buyers to use their lending service. However, the chances of seeing a Wal-Mart home loans or Costco Home loan will increase substantially as interest rates rise and offer higher yields to outside lenders and investors.
The main take away from this study, is that citizens are open to new lenders and innovations are being made in the world of lending and private finance. There are bound to be growing pains with any type of lending innovation and there will be plenty of red-tape to get through in order to be able to offer home loans, however more lending options offer more competition, and more competition leads to more savings.
A Wal-Mart, Amazon, or Costco home loan may very well become a reality in the not-so-distant future. Given that buying a home is typically the largest purchase that we make in our lives, we urge you to seek the best value in your mortgage financing and to choose your best home loan. However, keep in mind that the lowest cost or lowest rate is not always your best value and option. Call us today if you would like to discuss the steps to choose your best home loan, 972-499-0454.
+Patrick Glaros empowers people to find their best home loan option. Through planning and education, and a goal-oriented approach, Patrick and the team at Dallas Mortgage Planners have one common goal: Help clients make an informed decision to choose the best home loan for their unique situation. Find other articles written by Patrick.
