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November 08, 2013
Dodd-Frank Mortgage ReformChanges are coming to the mortgage market, and they’re coming all the way from Congress. The Dodd-Frank Mortgage Reform Act is set to go into effect in 2014, and its goal is simple: set tighter restrictions on lending. Many new qualifications will be required from borrowers, restricting the number of people who can access a loan—and reducing the size of loans available to them. The expected changes will affect many people, and we’ve outlined them below. If one or any of these could prevent you from the mortgage you want for a home, you should consider borrowing now, before the new year.

Debt-to-Income Ratio

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.

Down Payment

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.

If you’re interested in purchasingrefinancing, or learning more about mortgage rates, simply fill out our Fast Response form. Our experienced mortgage professionals would love to sit down and discuss your needs. We look forward to hearing from you!

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