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What brokers, real estate salespeople, mortgage professionals, and home buyers should know is that starting in 2014 there are new rules and regulations for Qualifying mortgages set forth by Dodd-Frank. Two articles that address this issue are written by Nick Timiraos, of the Wall Street Journal, and the other by Christine DiGangi in Aol Real estate News. So what should we take from their articles?
To start, these new rules are being set up to try and decrease the amount of foreclosures and exclude those that would potentially default on their loans. This means that it will be tougher for home buyers to become qualified. However, it does not mean that they can not obtain a mortgage. It means that lenders will now be held liable to the loans they give to borrowers. They will need to ensure that their clients can afford to pay their mortgage without the risk of default. The lenders will attempt to decrease the liability on themselves by not qualifying. Keep in mind lenders will be looking at the Debt-to-income ratios when qualifying borrowers.
Brokers and real estate salespersons will need to examine and scrutinize buyers. Qualified buyers will have worked to increase their credit scores and lower their debt to income ratios. These qualified buyers will have spoken to lenders and discussed in depth how they, if not eligible, can work to improve their chances of qualifying. Be sure to contemplate this information and do your own research. The more you know the better.
"There's bound to be something that confuses the borrower, and no one should enter into such a large financial decision with uncertainty."-DiGangi
Provided below are links to the articles that were discussed and referenced.
http://realestate.msn.com/blogs/listedblogpost.aspx?post=46a1dfd9-4a40-4dc5-9ac7-a62df5ef5b4c
http://realestate.aol.com/blog/2013/12/02/planning-buy-home-2014/
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