As of January 10, 2014, there is a new rule that may impact anyone wanting to purchase or refinance a home, and that rule requires that lenders more thoroughly assess a borrower's ability to repay a loan.
The rule is part of the Dodd-Frank Consumer Protection Act, which placed legal liability on banks and mortgage lenders for pre-determining borrowers' ability to repay their mortgages. It was enacted to help ensure borrowers would get a home loan that they can actually afford to repay, therefore helping prevent people from going into foreclosure and losing their homes.
The new guidelines restrict loan limits, places more restrictions on a borrower's debt-to-income ratio, and also guides allowable fees and other items. It may make mortgage borrowing more difficult for some, but the guidelines are there to help ensure you don't get in too deep over your head.
The best thing to do is to speak candidly with a trusted loan professional prior to embarking on a new home search, or even if you are simply considering a refinance of your current mortgage.
Have a great weekend and stay warm!
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