Broadview Mortgage: Beginning January 2014, the US Government Will Change the Rules of Mortgage Nationwide

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Record low interest rates are coming to an end, and current Federal Housing Administration (FHA) loan limits are set to re-adjust to Fannie Mae and Freddie Mac conforming limits.

Analysts project that the maximum Fannie-Freddie loan size will drop the most in expensive areas, such as coastal California. Simply put, interest rates are rising and loan sizes are dropping, tightening the reigns for both lenders and borrowers. Borrowers who no longer qualify under the revised limits will have to shop for a jumbo loan, which requires a higher credit score, more financial reserves, and larger down payments.

New regulations will have borrowers jump through hoops. Qualified mortgage loans will only be made to borrowers that have a debt-to-income (DTI) ratio of less than or equal to 43%. This means that lenders will confirm the borrower’s monthly debt payments do not exceed 43% of monthly income. Only certain small lenders will be allowed to issue qualified mortgage with a DTI ratio over 43%.

Mortgage lenders will also look more closely into additional financial information. Lenders will check the borrower’s documentation to make sure loans will be repaid including W2’s, bank records, and employment history. These regulations could potentially make it tougher for the self employed, those with irregular incomes, those with lower paying jobs, and retirees. If folks do one does experience difficulties obtaining a mortgage, one solution is to settle for an adjustable rate mortgage instead of a fixed-rate mortgage, and another solution is to apply for a second mortgage, however it does tend to be pricey, and it is not ever recommended to pay down debt with debt.

For those of you interested in obtaining a mortgage in the immediate future—now is the time, before year-end, especially if you live in a high cost area. For others, start saving now for the down payment and work on fixing up your credit. Obtain a copy of your credit report (a free copy can be acquired at http://www.annualcreditreport.com). Contrary to popular belief, personal inquiries do not affect your credit. Dispute any errors on the report, pull your credit score, pay down debt, avoid opening new lines of credit, and pay all bills on time. Improving your credit profile will make it easier to meet the standards of attaining a qualified mortgage, as long as it is done well in advance of filling out a loan application.

As depicted in the image attached, is evident that borrowers with higher scores get the best mortgage rates. When comparing the best and worst credit scores, there is almost a $70,000 difference in interest paid over the term of the loan. At the end of the day, the requirements are in place to assure that banks are making better loans, and that consumers are more protected.

Since 1988, Broadview Mortgage has distinguished itself through honest business relationships with clients, loyalty to employees, and commitment to empowering and educating those communities. Broadview Mortgage is a mortgage banker and direct lender made up of loan officers with years of experience in the firm and sheer excellence in customer service. The firm works to explore several financial solutions for its clients, for which they choose. Business is initiated and conducted on a word-of-mouth basis. Broadview Mortgage is a delegated underwriter for the Federal Housing Administration (FHA), the Veterans Administration (VA), and the Federal National Mortgage Association (FNMA). Broadview is also approved to participate in several state, county and city programs for First Time Home Buyers.

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Brittany Williams
Broadview Mortgage, Katella Branch
+1 (714)538-4404 Ext: 114
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