Mortgages Then and Now in America!

January 9th, 2017 | Mortgage News!



A Brief History of Mortgages

     In the day when someone wanted a home loan, he or she would walk to the neighborhood bank. If the bank representative knew the customer and considered the person a good credit risk, then the customer would get the loan. Mortgage loan terms were not the customer-friendly in those days. Loan terms were limited to 50% of the property value, and the repayment schedule was spread over three to five years and ended with a balloon payment.

     Prior to the mid-1930s, America consisted primarily of renters, and only four in ten households owned their own homes. It wasn’t until 1934 that the Federal Housing Administration (FHA) played a critical role in helping the country out of its economic depression. FHA initiated a new type of mortgage aimed at those folks who did not qualify under the existing loan programs. FHA lengthened the loan terms from the traditional 5 to 7 year loan to 15 year loans and eventually to the 30 year loan term, which is common today.

     FHA started a program that lowered the down payment requirements. It set up programs that required a 20% down payment, a 10%
down payment, and lower. This forced banks and lenders to change their loan terms, creating many more opportunities for average
Americans to make their dreams come true and own their own homes. FHA also started the trend of qualifying people for a loan
based on their actual ability to pay back the loan, rather than the old way of simply knowing someone.

     Keep up on all the new mortgage programs!  One may perfectly match your goals & objectives. Give us a call at (901) 388-1588
and we'll tell you all about them!


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