Keeping Homes Afloat

New mortgage rules went into effect this year in an attempt to limit the number foreclosures and loan defaults.  Lenders are now being asked to meet two new requirements: The Ability to Repay rule and Qualified Mortgages.

The Ability to Repay rule requires that the lender qualify that the borrower has the assets and the income to make the loan payments throughout the life of the loan.  They must take into consideration the highest mortgage payments that may be required under the terms of the loan.  This is important because many found themselves in trouble with adjustable rate mortgages as many did not have the ability to pay the increased monthly payments when the interest rate increased.  Unfortunately the income verification may put an end to low or no-doc loans which means more paperwork for the borrower. 

Qualified Mortgages will help ensure that borrowers will not buy more house than they can afford.  Debt-to income ratio will be considered when writing new loans and the total fees that are charged on the loan, including title insurance, will be limited to no greater than 3% of the mortgage balance.  

The recent changes in mortgage rules are complex but aim at protecting the public.  The most important decision made when purchasing a new home or business is to decide how you will finance the investment.  It cannot be stressed enough the importance of a professional and reputable lender.  Ask for referrals and search for a loan officer or mortgage representative with whom you are completely comfortable.  Do not be afraid to shop around.

Dell’Omo Inc. Realtors is a boutique agency with over 40 years of experience in all facets of commercial & residential real estate.  We will take the time to make sure that your property is strategically marketed to your best advantage.  Contact us for an appointment so that we can discuss your property and find the best strategy for marketing and selling your largest investment. Call us at 732-263-5000 or Find us on the web at www.dellomorealtors.com and LIKE US on Facebook.