Current laws allow people to borrow up to 50% of their income. After Congress enacts the Dodd-Frank Mortgage Reform, that figure will drop to 43%. If you have a car payment and credit card bills, that 43% may not allow much leeway to borrow the size of loan you need. For others who have significant student loans as well, a mortgage of any size may be impossible to obtain until they’ve unloaded some of their debt.
Though exact figures haven’t been released, it’s expected that the reform will require borrowers to put forth a larger down payment. Cash-on-hand is difficult to come by for anyone, which means a mortgage available on December 31, 2013 might be impossible to obtain the next day. If you have enough at least 3.5% for a down payment now for the mortgage you want, you should place your offer before the stiffer regulations go into effect.
Purpose of Changes
The rationale of the Dodd-Frank Mortgage Reform is to maintain a steady market and promote safer investments. The recession forced everyone to understand the danger of buying more expensive homes than they could afford. These expected changes are intended to keep the housing market on its steady recovery, but if they’re likely to limit your access to a mortgage in 2014, apply now while more loans are available to more people.
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