On the July 11 episode of my Lykken on Lending podcast, we had the opportunity to discuss where the mortgage industry is headed with industry expert Allan Weiss. During our conversation, Allan brought up a great point about the way borrowers see homeownership. Historically, many homeowners have tended to believe two contradictory things at the same time: Don't put all of your eggs in one basket, and go as far into debt as possible in order to buy your home. In other words, people do put all of their eggs into one basket—and that basket is the home.
Of course, it's a great financial decision to own a home—and even to go into a reasonable amount of debt in order to do so. A house is one of the best investments a citizen can make. The problem is that people can become over leveraged in their debt, and the home becomes more a burden than an asset. As always, the problem isn't that people borrow; it's that people borrow more than they should.
In the end, what's good for borrowers is good for lenders. If we are to build a stronger, more robust mortgage industry, we've got to make sure people are informed about what they're getting themselves into when they take on mortgages. We've got to be on the frontlines fighting to get people back to work and into good jobs, so that they can actually afford homeownership. As with any other industry, the mortgage industry is only as successful as its customers allow it to be.
David Lykken, a 43-year veteran of the mortgage industry, is president of Transformational Mortgage Solutions (TMS), a management consulting firm that provides transformative business strategies to owners and “C-Level” executives via consulting, executive coaching and various communications strategies. He is a frequent guest on FOX Business News and hosts his own weekly podcast called “Lykken On Lending” heard Monday’s at 1:00 p.m. ET at LykkenOnLending.com. David’s phone number is (512) 759-0999 and his e-mail is [email protected].