Qualified Mortgages And How Does It Affect Mortgage Borrowers
This BLOG On Qualified Mortgages And How Does It Affect Mortgage Borrowers Was UPDATED On February 6th, 2019
Qualified Mortgages Rules: Effective Friday, January 10, 2014
Effective Friday, January 10, 2014, the new QM Mortgages Rule, Qualified Mortgages Rules, come into effect.
- The Qualified Mortgages Rule, QM Rule, has been implemented to take effect today in order to alleviate the risks associated with mortgage loan default rates and foreclosure rates among borrowers
- The newly created CFPB, The Consumer Financial Protection Bureau, is the self-regulatory organization that has implemented the Qualified Mortgages Rule
- The CFPB is in charge of the enforcement of Qualified Mortgages
In this article, we will cover and discuss qualified mortgages and how they affects borrowers.
Objective Of Qualified Mortgages: QM Is The Ability To Repay
The objective of Qualified Mortgages Rule is the ability to repay. The ability for a borrower to afford the mortgage loan payments.
- Mortgage lenders are responsible to qualify a mortgage loan borrower with the following:
- Credit scores
The above factors are used to determine whether the borrower will be able to afford their mortgage payments and has the ability to repay their mortgage.
- Debt to income ratios will be scrutinized and verified more intensely than ever before
- Income needs to be a qualified income
New Qualified Mortgages Rule: What Are Qualified Mortgages
The ability to repay and afford is the main focus of the Qualified Mortgages Rule of 2014.
- The main factor in determining whether the mortgage borrower has the ability to repay is by determining their debt to income ratios
- On conventional mortgage loans, the back end to income ratios are capped at no greater than 43%
- Compensating factors will play a major role in approving a mortgage loan
- Fees on mortgage loans cannot exceed more than 3% of the mortgage loan amount
- Examples of fees and charges are the following:
- Origination charges
- Processing and Underwriting fees
- Title insurance
- Other fees associated with the origination of the mortgage loan
Ability To Repay: Reserves
Reserves may be required and its up to the mortgage underwriter to determine if the borrower has enough reserves.
- Borderline mortgage files will be scrutinized even more where this can cause delays in getting a mortgage loan cleared to close
- Underwriting time will probably take longer than it did back in 2013
- Down payment requirements will still remain the same for first time home buyers
- 3.5% down payment for FHA loans and 5% down payment for conventional loans
- Many mortgage bankers and mortgage brokers are still in the implementation phase to today’s new QUALIFIED MORTGAGE RULES
- We will keep you posted
Qualifying With Direct Lender With No Overlays On Government And Conventional Loans
Gustan Cho Associates at Loan Cabin Inc. is a direct mortgage lender with no lender overlays on government and conventional loans. Home Buyers who need to qualify for mortgage with a direct lender with no overlays, please contact The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. or email us at email@example.com. We are available 7 days a week, evenings, weekends, and holidays. The Gustan Cho Team at Loan Cabin Inc. also offers NON-QM Loans. There is no waiting period after bankruptcy and/or foreclosure. We also offer bank statement mortgage loans for self employed borrowers.No tax returns are required. Contact us to learn more about our traditional and alternative financing mortgage loan programs at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org.