New Mortgage Rules will impact Buyers in 2014

Mortgage Loan imageHow Dodd Frank Legislation may affect Buyers seeking Loans in 2014

You may have heard about the Dodd Frank bill that was passed in the aftermath of the Banking Crisis in 2008. The goal was to put regulations in place that would prevent a similar meltdown from occuring again.

Among the major contributors to the financial crisis were Home Lending practices that enabled almost anyone who could walk, breathe and hold a pen to get a loan. Starting January 1, 2014, certain provisions of the bill that will make it harder for home buyers to get home loans will come into play. From what we hear from mortgage brokers we know, this will particulalry affect buyers who don’t have stellar qualifications. If you have great credit, strong debt to income ratios and the like, things may be much the same as they are today.

The legislation establishes the latest financial acronym….QRM….for Qualified Residential Mortgage. To get a QRM, you need the good qualifcations. If you don’t qualify for a QRM, then the banks are forced by the legislation to carry the equivalent of 5% of the loan value in reserves. Ouucch! As you can imagine, banks will make the borrower pay for this by charging higher interest rates, fees and what have you. We’ve pasted a good article which explains this in more detail below.

Bottom line, if you’ve been thinking about buying a house, and you’re on the borderline for qualifying, it would be wise to buy before years end. It’s also a good idea because the market is slow at this time of year and you may get a better deal now than in the New Yeaer. And, of course, rates are still low and they’ll be headed up next year.

Link to Article:


About Tom & Beth White-O'Connor

We've lived in Boulder and the surrounding mountain area for over 23 years. We're Realtors at The White-O'Connor Team, Coldwell Banker Residential Boulder. Tom loves to write, play music, look at houses and find great house deals! Beth can fix anything and she loves house design and remodeling. Our house is a testament to her creativity. We have a daughter in San Diego who gets to ride horses for a living. Our two cats and the most amazing 16 year old dog in the world keep us company at home. Give us a call at 720-276-0826 or 720-366-6196 if we can help you Buy or Sell a home or find a great rental property. Best, Tom and Beth.
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