Sunday, January 12, 2014

New Qualified Mortgage Rule Now in Effect

What Does This Mean to You?

You may have heard about a new rule that may impact people looking to purchase or refinance a home.

What is This Rule? 
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 was it Enacted? 
The rule is part of the Dodd-Frank Consumer Protection Act, which made banks and mortgage lenders legally liable for determining borrowers' abilities to repay their mortgages. It was enacted 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 is the Bottom Line?
While new guidelines are now in effect related to loan limits, a borrower's debt-to-income ratio, fees and other items, the good news is that the Consumer Financial Protection Bureau (CFPB) estimates that 95 percent of all mortgages made in 2013 already met the new rule. So there's a good chance the new rule won't impact the majority of borrowers.

If you're thinking of purchasing or refinancing a home this year, or if you know someone who is, I'm here to help. Give me a call or send me an email, and I'm happy to answer any questions you may have.