Do you know what changes have been made to mortgages in 2014? Thankfully, you have a guide in the Equifax Finance Blog to help you understand what the new QM rule is going to mean for your chances to get a mortgage in Atlanta. The first thing to know is that the QM rule is good for the economy as a whole – it helps to make sure that the same easy loans that caused the financial bubble and collapse due to lax standards don’t get approved again. While the changes are far-reaching, they shouldn’t be particularly surprising to anyone who has had to consider preparations for financing a home purchase in the last year.
These changes come down to three big ones for borrowers that you need to know:
- Loans will require more documentation – with the new QM terms, lenders must verify borrowers’ income and assets in addition to credit score. This can lead to a lengthier approval process, and may pose certain challenges for self-employed buyers. Also, if you are considering changing jobs or going into business for yourself, you should wait until after your home purchase.
- Riskier loans are off the table – if you were considering something other than a conventional, fixed rate mortgage, you may be out of luck. Loan types with creative financing, or that require borrowers to spend 43 percent or more of their household income to make mortgage payments, means that lenders would need to accept a portion of the risk on the loan.
- You must be able to repay your loan – under the new rules, a borrower’s debt-to-income ratio—how much is owed compared to how much the borrower makes—cannot exceed 43 percent when the mortgage is included. This cuts down on the risky nature of traditional-style loans.
There’s a lot more to learn about mortgage changes in the new article, “Things to Know About Getting a Mortgage Under the New QM Rule.” Read all about it and other important financial advice for 2014 on the Equifax Finance Blog today.