Sorting through the alphabet soup of home mortgage options
Confused by the home-financing market these days? You have a reason to be. Less than a decade ago there were about a half-dozen standard mortgage plans available to home buyers. Today, by contrast, there are about 200 different types or varieties of home loans - one for every conceivable kind of buying situation.
While the trend in recent years has been to develop new and innovative mortgage-loan plans to meet the diverse needs of home buyers and lenders alike, the trend now is to develop computerized information services to interpret and simplify all those mortgage plans.
Major real estate associations as well as private companies are structuring information programs that will quickly sort out and identify the best-possible mortgage plan for individual home buyers.
One new firm, Compu-Fund, has set up an elaborate electronic-communications system to generate instant data on currently available home-mortgage loans for real estate agents. The information is communicated to them through their office computer terminals.
Using this system, an agent can analyze a home buyer's situation and needs, obtaining within seconds a computer-generated, printed description of the best mortgages currently available for that specific buyer within the technological limits of the computer program.
A similar computer service is beginning to surface within the jurisdiction of local boards of realtors. Last year, for example, the San Fernando Valley (Calif.) Board of Realtors launched a computer program for its members, plugging in terms and conditions of available home-mortgage loans offered by all major lenders in that area.
The program has been extremely successful and popular with home buyers, according to Robert G. Adamson, executive vice-president of the board, the largest in the United States.
Even some individual realtor companies are setting up such a service program. Van Schaack & Co., Denver, has announced a new computerized service to determine the locally available loan program best suited for specific home buyers. The program also provides buyers with detailed printouts, outlining the monthly payments, up-front financing costs, and maximum amounts of loans for which they are qualified.
The Van Schaack program provides an in-depth comparison of home-loan plans available in the Denver area, according to A. Bruce Bowler, senior vice-president for mortgage banking.
In some cases, real estate associations add to the numbers and complexities of currently available home-loan plans. The California Association of Realtors (CAR), for example, now offers a California Association of Realtors Mortgage Assistance Corporation (Carrie Mac) home-financing plan. A key aspect of the plan allows buyers and sellers to negotiate their own interest rates and terms. Then the seller can ''cash out'' of the transaction by selling the note through Carrie Mac at the closing of the transaction.
As a result, CAR officials point out, the seller will have the necessary cash for a subsequent home purchase or other investment - and will not have to worry about monthly payment collections. Of course, there are a few details to consider, such as structuring the original seller-carry-back financing contract to meet Carrie Mac require-ments.
Also, there is a charge (discount) involved in selling the note through Carrie Mac.