Mortgage Market Domain Overview
Isis C. Harvin
Southern New Hampshire University
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Mortgage Market Domain Overview
One of the most important events in the family dynamic is that of owning a home. There was once a time when a home was just considered something that a person needed to do to satisfy the family provisions, now home ownership is an important part of the American dream. The type of information that is necessary to make a decision that will lead to positive results and lead an individual or family to owning a part of the American dream is in fact a mortgage believe it or not. In this instance we are talking about home ownership and its’ origins. There was once a time when a person could just find a parcel of land and begin to build and develop on this land and once this took place the land and all of the contents were considered to be legally owned by the occupants. Through the progression and evolution of man’s understanding of nature and the law a consideration called mortgages
Mortgages are not just a part of the American debt process but is also considered to be a part of the assets of the American families. Mortgages became a part of the fabric of American society in the middle of the 20h century (The American Mortgage in Historical and International Context, Green & Wachter, September 2005). However, before the middle of the 20th century, around the end of the 1920’s at the onset of the great depression larger down payments were required, variable interest rate loans were a common practice, and loans were typically renegotiated every year.
What is really interesting about this is that the lending practices at the onset of the mortgage process was held by bankers and the practices were really fly by night as opposed to being procedurally sound and therefore a great number of people were subject to personal prejudices and procedures that take away from the true process of ownership and sometimes makes the ownership of a home a problem to say the least. The practices that were in play at the inception of mortgages were a reflection of the times and how people viewed things at that time.
However, as times progress things change and as things change they usually change for the better and the real estate and mortgage process is certainly a very good reflection of change being for the better. One of the most important facets of mortgages is the role that it has played in the rise and strengthening of the economy while supplying the most integral part of the American dream, which is home ownership. In the early part of the 20th century around the late 1920’s and the early 1930’s mortgages were renegotiated every year and also with the use of variable interest rate mortgages where the interest rates change according to the principal of the loan. This is not the best practice and can be considered as a predatory lending practice.
As with all things time changes and hopefully progress comes along with that change as it has in the homeownership process. While there are still some predatory practices that are in use such as the adjustable rate mortgage, the homeownership progress has moved forward in ways that were not even conceivable in the earlier part of the 20th century. Not only are there now several different types of mortgages, there is an entire entity dedicated to the process of mortgages and homeownership where mortgage companies have title companies and other entities such as appraisers who tell us what the value of the homes are. In the beginning of the modern mortgage that was considered to have come into conception in the early 1930’s the word that mortgage truly means lived up to its’ reputation. Mortgage literally means death pledge and that is exactly what a mortgage was at that time.
Now with the concept of fixed rate mortgages people are able to make sensible investments into the homes that they dream of on a sensible budget and not have to worry about the hassle of renegotiating their mortgages every year or being taken advantage of through predatory lending practices. While it is true that there are still some predatory practices in play, there are many more checks and balances in place to insure that these practices are not taking place and there are stiff penalties for those who are caught trying to fleece the public with lending practices that are less than scrupulous to say the least.
According to Brena Swanson of Housing wire in 1940 the average cost of a hme was roughly three thousand dollars and the average income was roughly sixteen hundred dollars (First American Mortgage snaps up valuation veteran Forsythe Appraisals, Swanson, B., April, 2016). The average home was twice the amount of the average yearly income, in this day and age it is basically the same with the exception that the average income is now twenty times the cost of a home in the 1940’s and people are now buying homes that are far more opulent than anyone could have imagined during that particular era.
Now that there are more ways and means to purchase homes and to insure that the homes are worth what they are being sold for. With the use of mortgage companies that are specifically designed to cater to people who are seeking to purchase a home, no matter if it is the traditional slice of the American dream or a more opulent slice of the American dream, there are also independent appraisal companies as well as title companies all specifically geared to assist the home buyer in whatever they need to procure a mortgage that is tailor made to fit the client’s specific needs.
With the method used to bring more people into the home ownership circle there are many different venues that are available to the home buyer, historically there was one method to purchase a home and that method was perilous to say the least. However, as it is with most things; time has brought on a new way of doing things and this new way has brought with it a means to make homeownership more of a reality than a dream.
Green, R.K., & Wachter, S. M. ( 2005, September 21). The American Mortgage in Historical and International Context [ Scholarly project]. In Penn Libraries/. Retrieved August 15, 2016 from http://repository.upenn.edu/
Swanson, B. (2016, April 1) First American Mortgage snaps up valuation veteran Forsythe Appraisals. In Housing Wire. Retrieved August 15, 2016, http://www.housingwire.com/articles/36672-first-american-mortgage-snaps-up-valuation-veteran-forsythe-appraisals