New Mortgage Lending Rules

To all potential home buyers out there, there is a really important change in the mortgage world and could be a big change in your ability to secure a mortgage.

So what is this change?  As of January 10, 2014, lenders are required to more thoroughly assess a borrower’s “ability to repay” a loan, so that he or she can receive a “Qualified Mortgage” (QM). 

Why do we have this change?  As part of the Dodd-Frank Consumer Protection Act, banks and mortgage lenders are legally liable for determining borrowers’ abilities to repay their mortgages. It is intended to help ensure borrowers get a home loan they can afford to repay, and to help prevent people from going into foreclosure and losing their homes.

What does this mean for you?
While new guidelines went into effect on January 10th, some of the charges including debt-to-income ratio and closing fees, some good news is that the Consumer Financial Protection Bureau estimates that 95% of mortgages made in 2013 would have already met the new rule, so this may not effect MOST buyers….but if you’re thinking of purchasing or refinancing a home this year, or if you know someone who is, it would be wise to talk with your local lender or real estate broker before you begin house hunting!

We all (lenders and brokers!) want to make sure that when you do buy your new home, whether it’s your first, last or something in between, you’re making a wise, thoughtful decision on this huge financial undertaking.

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