Owning a home has become easier in the world today than it used to be. With a good credit line, anyone can get a home of their choice and pay later to the bank. Without this system, a lot of people won’t be able to afford the house they want.
However, with this development, the lending industry and real estate are now like two peas in a pod. It is almost impossible to talk of one without talking about the other. As a result of the relationship the lending industry has with real estate, both of them have been known to develop at the same pace.
With the pandemic that has been holding the world at ransom since last year, growth in the two industries are inevitable. That is why, we decided to have an interview with Jacques Poujade, an expert real estate investor to talk about how the lending industry will change in 2021. He is also a managing partner at Lend Plus and his advice has been known to help individuals and businesses break into the real estate world.
What exactly is the lending industry?
The lending industry has to do with a number of establishments that borrow people money for one thing or another based on their credit. This money is usually for a specific purpose and the most common of them are mortgages and student loans.
As a real estate enthusiast or someone who wants to get a home, what you should be interested in is mortgage. They are usually homes that are placed in the custody of a bank or financial institution for a monetary consideration.
This means that the owner used the home as collateral for a loan, and the bank, in trying to recover the money the seller has already received, will obtain the money from the buyer periodically till it is complete. Of course, buying and selling a home can take place without a financial institution’s interference but it is not always as fast.
You mentioned something about credit, what does it mean?
Credit has to do with how well a bank or financial institution thinks a person is capable of paying back something of value that has been lended to him. This can be as a result of prompt payments in the past or how much the person is capable of earning.
A close term to credit is line of credit and it has to do with a fixed amount of money that an individual or business can borrow from the government, bank or other financial institution. When the money is borrowed, it can be paid back so it can be borrowed on another day, but the limit cannot be exceeded.
A good credit score will determine the amount of money you can borrow from a bank or financial institution at any given time.
What will I need to apply for a loan?
You don’t need much to apply for a loan except for the documents the bank or financial institution requires. In the United States, the following are the general documents you need to make available before your loans can be processed.
The first of these records are those about personal details. They deal with those information that can be used to identify or track the person who is obtaining the loan.
The second is a credit report which must be obtained from at least three institutions. This report will help the lender put a cap on how much you should be borrowed.
For businesses who want to borrow from a financial plan, a business plan and resume can be thrown into the mix so that the financial institution can determine whether to borrow you the money or not based on the solidity of your plan.
That’s great to know. So, the pandemic has ushered in a lot of chances for a lot of industries. How do you think it has affected the lending industry?
Since meeting up physically was reduced to the barest minimum throughout last year, small lending businesses that are known as Fintech companies were able to grow. This is because their operations are based on the internet and they are easy to access from anywhere.
The market cap of these types of companies in the industry went higher in 2020. In 2021, a higher increase is expected to happen.
Another change to the lending industry in 2021 is expected to usher in are; low interest rates. As a result of the effects of the pandemic, a drastic reduction of the federal funds rate was seen in 2020. This trend is expected to continue in 2021 since businesses are not out of the danger zone yet.
Another change this year is expected to bring is the increased use of automation and artificial intelligence across all sectors as opposed to traditional lending techniques.
Do you think these changes are good?
As far as I’m concerned? Yes. These changes are revolutionary. They are great for the borrowers, especially small companies. With competing lending companies, they can get suitable credit lines to fund their businesses.
The lending process will also become faster. This is a great thing for many industries since many people who did not have the means to invest in them before can now get necessary funding.
Also Check: Jacques Poujade’s previous interview with Media Training For CEOsJacques Poujade On Real Estate: Why 2019 Is The Perfect Year To Invest Into