The fears of mortgage lenders.

What are the main fears of home lenders?

You can understand mortgage loans much better once you understand what makes the mortgage lender nervous. If you can see how lenders in the home market think, you will be able to understand if and why they will accept your mortgage application - taux hypothecaire.

There are two major fears in the lending industry:

Fear of losing money

A lender does not want to lose money; neither the capital for the original home loan, nor the lost interest payments on the mortgage. From their perspective, this is an all too common occurrence - taux hypothecaire

In this case, the lender has to incur even more costs over the loss of capital and interest, because he has to secure the services of a lawyer to start foreclosure proceedings.

After that, he has to be concerned that the bank will be able to sell the home for an amount that will recover their costs of principal (taux hypothecaire), lost interest and lawyer’s fees.

Loss of time

The efforts necessary to repossess a property is a great loss of time as well as money to a lender. The lender is really only interested in collecting mortgage payments and earning interest on the capital lent. Taking care of a home while it is in foreclosure proceedings is not the best use of a lender’s time; he just considers it lost time.

Even in the instances where the lender is not going to lose the principal (taux hypothecaire) because the loan is guaranteed by the CMHC or some other insurer, he will still want to avoid foreclosure by assuring that he only has good loans in his portfolio and that each borrower is a good risk.

A lot of people wonder why a bank even worries about the credit risk of the borrower when they hold the home as collateral.

The answer is simple. Banks don’t want to own your home; they just want to collect your mortgage payments - taux hypothecaire.

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