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Customized Mortgages and its Benefits

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Every homebuyer in the US has unique borrowing needs. No two mortgages remain the same after their lifecycles are complete.

Mortgage companies are offering flexible loan options, but have to comply with regulations. For lenders, mortgage customization offers a chance to transform the borrower-lender relationship and make profits in a transparent manner.

Trends nowadays

Borrowers are seeking options to refinance their mortgages and many lenders are offering customized plans, which let homeowners choose suitable tenures of repayment and enable them to refinance loans at a lower interest rate if required.

Shared appreciation and reverse annuity mortgages

People with high appreciation value for their properties can go for shared appreciation mortgage (SAM). In that case, the lender receives a share or all of the appreciation value of the mortgaged property. Elderly people have the option of reverse annuity mortgage (RAM), in which lenders can receive the repayments of a long-term loan, and wait for the property to be sold for full repayment. Banks need to identify when what works and for whom.

Customers want to time their repayments based on life events like retirement and children’s education. Lenders using big data analytics are definitely displaying greater flexibility in that context.

Technology for low-risk profit from customized mortgages

Any mortgage is a big decision for the borrower. Flexibility on your part will definitely stand out and increase your popularity. Customers only expect to find affordable interest rates, suitable tenures, and zero controversy related to back-end fees. By using analytics and other software technology, lenders can figure out a vast array of customized mortgages, each suitable for a set of borrowers.

The use of third-party data in predictive analytics has emerged to help lenders identify low-risk customizations which can be made to loans during the repayment phase. Bankers can also modify mortgage terms without risking loss by analyzing big data through a sufficient technology.

Options to refinance the loan

When borrowers are paying high interests, they can choose to refinance the mortgage at a lower rate and pay it off sooner. Refinancing is a preferred option when markets are volatile, but identifying such circumstances for the near future will require meticulous analysis of customer data. Technology should be able to indicate risk incidences through the tenure, by depending on third-party data integration.

Closing the mortgage quicker

When borrowers are paying mortgage payments for a longer duration, they can modify the plan and decide to reduce the term. This will help them to close the mortgage much earlier and enjoy peace of mind knowing they are debt free. Such an option was not available earlier.

Comfort level depending on budget

One of the best ways out for borrowers is to decide on the monthly payment as per their repayment capacity. Being able to choose this parameter was hardly possible. The new flexibility creates freedom to set the loan terms based on the borrower’s capacity to repay, keeping all other advantages intact.

End note…

With the right planning and proper homework, lenders can offer the rightly customized mortgage, depending on borrowers’ budgets. The availability of new options will have a positive impression on customers.

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