Why is there so much paperwork mandated by the bank for a mortgage loan application when buying a home today? It seems that the bank needs to know everything about us and requires three separate sources to validate each and every entry on the application form. Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.
However, there is some good news in the situation. The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate probably around 4%.
The friends and family who bought homes ten or twenty ago experienced a simpler mortgage application process but also paid a higher interest rate (the average 30 year fixed rate mortgage was 8.12% in the 1990’s and 6.29% in the 2000’s).
If you went to the bank and offered to pay 7% instead of approximately 4%, they would probably bend over backwards to make the process much easier.
Bottom Line, Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.