New Qualified Mortgage Rules for Home Buyers in Lima, Ohio

As of January 10, 2014, the new restrictions on mortgage lenders regarding what loans are Qualified Mortgages (QM) and which aren't took effect.  These newer restrictions were instituted to help prevent the "everybody qualifies" lending practices that were part-and-partial cause of the housing bubble in 2006-07. The question now that everyone in the real estate industry is talking about is, "how will this affect the housing market?"  What we must first understand though, is what the new requirements are for QMs.

New Magic Numbers

Everyone who is interested in applying for a loan to purchase real estate after January of 2014 should be aware of the new magic numbers of 43 and 3.

43 is the percentage of debt-to-income that is now the first number that every lender is to look at in order to determine whether a borrower is qualified or non-qualified.  This ratio that compares a borrower's debt to their income isn't a new idea, but the number 43% is new.  Lenders have long looked at this ratio to determine if someone is stretched too thin. So for those of you who are thinking mortgage, check your ratio.

3% is the new cap on combined costs of lender fees and points.  This is a brand new idea in the industry.  Prior to this lenders would allow the market to determine how much they could charge in points and fees.  If their charges were higher than their competition, they would lose business.  This is how the free market is supposed to work.  Now, though, the U.S. government has stepped in to dictate a cap on these costs to the consumer.  I am just guessing here, but I am telling all of my clients to begin using the 3% number as their costs (why would any lender charge less?).

QM or Not - Mortgage Loans are Still Available

 So, you were thinking of buying a home and now believe that you can't because of the new QM rule limitations?  Not true.  Non-qualified does not mean that you won't be able to get a loan, it just means that you will most likely have to get an insured or guaranteed loan such as those offered by Freddie Mac and Fannie Mae.  This biggest problem is going to be finding a lender that is willing to work with you.  A survey of lenders conducted by the National Association of Realtors showed that 45% of lenders were contemplating not working with borrowers who could not meet the requirements for a QM.

http://www.bhhspro.com/agents/tim-parker

These are just 2 of the many adjustments made to the QM rule.  If you would like more information, or would like to find out if you can get a mortgage, let me know.  I have a lot of contacts in the mortgage lending industry and would be happy to find the right one for your circumstances.