As of January 10th, lenders will now have to consider the “ability to repay” and observe stricter lending guidelines. Lenders now will have to make “a reasonable, good faith determination” that a borrower will be able to repay the loan. These requirements stem from the Dodd-Frank Act of 2010 in an effort to prevent the risky loans that contributed to the financial crisis. These new requirements could affect first time home buyer and lower income buyers. Even with these new requirements coming into effect many borrowers will not be all that different as most lenders have already changed their practices since the financial crisis.
If you are interested in starting the home buying process and obtaining home financing, just be prepared to provide documentation. The days of providing little or no financial information to obtain a home loan are gone. The basic factors that lenders consider when making a home loan are still basically the same. If it is your first time buying a home or you have not bought in a while plan on some extra time with your loan officer and plan your financing ahead of your home search.
Full Article- Author unknown (2014, January 21). New year brings mortgage rules. Charlotte Observer.
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