What is my home worth? How the 2014 Qualified mortgage rules will affect you?


The home loan industry will soon have to adapt to new mortgage rules. Some of the new mortgage rules the Consumer Financial Protection Bureau has issued this year will influence qualification requirements and the types of mortgages that borrowers get. The new standards go into effect next year — but expect lenders to start adjusting to the new policies in coming months. The gist of one of the main rules is simple: Lenders will be required to ensure that borrowers have the ability to repay their mortgages. In return, lenders will be protected from borrower lawsuits so long as they issue “safe” mortgages that follow guidelines.

These safe mortgages are what the CFPB calls “qualified mortgages.” Certain groups of borrowers will notice a difference, analysts say. This is especially true for borrowers seeking larger mortgages. Self-employed borrowers also may need to jump through additional hoops to get a home loan.

What will change for jumbo loans? Mortgage professionals in high-cost areas say they worry that the new rules may create obstacles for some borrowers seeking large loans to buy or refinance a home. That’s partly because a mortgage that falls outside of the conforming and Federal Housing Administration loan limits (which vary between $417,000 and $729,750) will not be considered a qualified mortgage if the borrower’s debt payments exceed 43 percent of monthly income.

Interest-only loans will be harder to find: Borrowers who rely on interest-only loans will see changes, because loans that don’t require borrowers to pay principal during an initial period are not considered a qualified mortgage under the CFPB’s rules.

For more information, contact Regina@ReginaSingh.com