CFPB:

CONSUMER

FINANCIAL

PROTECTION

BUREAU

If you are planning to purchase or refinance a home in 2014, a vacation home or investment property, you will need to get with your mortgage banker to discuss a wide variety of different loan programs, and varying down payment options.  Now more than ever it is best to have your Realtor and mortgage banker working for you to help you navigate the process.

In a recent seminar hosted by SWBC Mortgage, Debbie Dunn offered

the 2014 updates  that change the way the consumer will qualify for/ purchase a home.

In a broad overview, the new rules for home-buying  are based on the

ATR or the Ability To Repay a loan, defined as the …

Reasonable Good Faith determination of a

Consumers ability to repay any consumer credit transaction

secured by a dwelling.

The following is a list of ways that your mortgage banker makes this Reasonable Good Faith evaluation:  8 CRITERIA

1.  Income/assets

2.  Employment status

3.  Principle and Interest

4.  Subordinate liens

5.  Tax/Insurance/Assets

6.  Debt and Obligations

7.  Debt to Income ratio

8.  Credit History

Following is a list of exemptions to this ATR rule:  HELOC-Home Equity Line of Credit, Revere Mortgage, Construction phase, Bond Loan, Vacant Land,  Investor loans, Time Shares

Then based on the Presumption of the ATR you are introduced to the

QM / QUALIFIED MORTGAGE.

There are 2 types of QM LOANS:

Temporary QM – Eligible for Fannie, Freddie, FHA, VA, RD, meets points and Fees cap.

General QM – No prohibited loan features, meets points and fees cap, DTI at or below 43.00 using appendix Q requirements (new book of rules).

There are several prohibited loan features with the QM: interest only, negative amortization,balloon payments,greater than 30 yr.

Points and fees are capped: 3% of loan amount of $100,000 or more and it varies by loan.

There are some underwriting criteria to consider: agency eligible or Max 43 DTI.

*MOST IMPACT for loans below $100,000 and loans above $417,000.

If you find yourself more confused than before you read this article call me.  I’m happy to share the names of several loan officers with you.   They will help you consider all of your options for your next home purchase.