Like many others wishing to take advantage of pandemic-induced low interest rates, I refinanced my home in 2021. I remember holding my breath while my lender checked appraisals to be sure that the value of my house was enough greater than the loan I was seeking that I could avoid paying mortgage insurance. In my previous mortgage, I had been paying for the insurance because, as a first-time homebuyer, I was not able to make a large enough down payment to increase the gap between the values of the home and the loan.
Each time I applied for a mortgage, my lender explained to me these policies, and I depended on their expertise to help guide my home-buying decision. I knew what homes I could afford to buy because the lender, trained in risk assessment and committed to protecting their own interest in the deal, would not loan me more than the value of the investment I was making with the loan.