The federal government is enacting several new mortgage rules starting in January of 2014. Many of the new regulations will not be discernible to borrowers, like changes to the good faith estimate form. But some changes will make a noticeable difference to consumers.
First, the government is considering lowering the loan size limits on mortgages backed by Fannie Mae and Freddie Mac as well as FHA loans. No final decision has been made on that front yet.
Second, the debt to income ratios (DTI) for most loans are scheduled to be reduced and fixed starting this coming January. Currently there is some leeway in DTI ratios and folks with solid assets and credit scores can be approved with debt to income ratios of more that 50%. The new rules set the maximum DTI at 43%. While this will help ensure borrowers don’t get in over their heads, it also means that borrowers will be not qualify for as much money as they currently can.
Third, interest rates are likely to rise. Rates are currently still at very low levels by historical standards but most pundits are expecting them to continue to rise for the next year or two.
The good news is that this Autumn is a marvelous time to purchase a home or refinance. Housing values are still low but moving higher so anyone who purchases a home this fall is likely to get a low rate and likely see the value of their new home rise over time. Likewise, with rates still very low refinancing is an excellent idea for millions of American homeowners.
Contact us today to learn more about available programs and to get started on the process.