CHANGE is coming.
I know many people believe change is a 6 letter bad word but in life it is one of the only guarantees. In 2014 there are changes in the mortgage process that will be affecting anyone looking to buy or refinance a home. On January 10, 2014 our government will be implementing regulations to try and help protect our economy from another housing crisis.
One of these regulations creates a maximum debt to income ratio of 43%. This regulation will also not allow the consideration of large cash reserves or a large down payment to offset a higher debt to income ratio. This may not be a big shock to many as most banks already have stricter guidelines that they follow.
Another aspect to this change is the 3% rule which means that the fees charged for loan origination will not be allowed to exceed 3% of the loan. This seems like a great thing to most but it may affect approval rates for lower loan amounts because now the bank will not recoup their costs which may push them towards higher limits for a mortgage
As with all change it will take some time to get used to these new rules but in time Im sure it will take its place in the “new” normal.