Taking out a Mortgage or Refinancing in 2014? Plan on more Paperwork
Today, when applying for a mortgage or refinancing your current mortgage, you will find the mortgage lender requires lots of paperwork to prove everything you said on your loan application was true.
New Lending Rules:
The discussion of the new rules called qualified mortgage or ability-to-repay rule, which protect consumers from unscrupulous lending practices and provide creditworthy homebuyers with access to safe mortgage financing. Lenders will now look deep before making a mortgage loan. They will be a little tougher about proving your income, credit and debts.
Lenders can still make any loans they wish, however if they go outside the qualified mortgage rules, they will not have the protection against borrower lawsuits that the loan was inappropriate or unfair. As you are aware of and in the media, some lenders have faced lawsuits filed by the state attorney general and class actions over loans made during the housing crisis.
In 2014, in order for the lender to make a qualified mortgage loan they will have to PROVE the following:
1. Income and assets
2. Employment status
3. Credit History
4. Employment status/history
5. Other Debts
6. Monthly Payment for Mortgage, Ratio
7. Monthly Payments on other mortgage loans you get at same time.
8. Monthly Payments for other mortgage related expenses, such as property tax, monthly, maintenance fees etc.
Low to moderate income buyers, along with self employed buyers will also have a tougher time in the new lending environment, who does not have a consistent flow of income.
These rules will not go into effect until January 2014, so we have no history yet on how long the loan process will take. Currently loan officers can process and approve loans in 16 to 25 days, depending on different variables.
Regardless whether you are in the process now of applying for a loan or going to in 2014 after the qualified mortgage rules start, just be aware it may take a little longer and the quicker you can get your list of items to your loan officer, it will only help the process.
Your Realtor will have a list of the preliminary items to get you started that the loan officer, along with the copy of the contract, sales price, address and copy of the listing.
Make a copy of ALL THE PAPERWORK you give your lender and keep it in a folder, we are finding some are requesting it again and you will have it ready to fax immediately or scan and email.
Discuss the Lender Choices with your Realtor. They help folks go through the mortgage application process every day and know what lenders are really doing versus what their loan officers say they are doing. In your situation you may need a bank. traditional lender, non-traditional lender, one that has its own in-house underwriters that keep their loans and not sell them off. Some lenders Ratios are more lenient than others on the back end depending how the whole file looks. Your Realtor should be able to guide you through the process with the pulse they have on the industry.
Do not make any false statements on your loan application. All the new verifications mean, you are just going to get caught and you won't be able to get your loan.
HOW DO WE SEE THE HOUSING MARKET IN 2014?
I think the consumers will see healthier markets, keeping up with the pace and gains made in 2013. New loan originations will probably dominate 2014 as interest rates creep up and refinancing trends downward. I am sure there will have to be some tweeking as we all are dealing with these new rules and regulations that are implemented in 2014.
Home Values I believe will continue to increase as the market will continue to improve and heal, however the economy will be the wild card and would be the game changer if we had a downturn.
Rates are still very low and the housing market very affordable.
If you find yourself in the housing market in 2014, call me! I would be glad to help you reach your goal of purchasing or selling. I have been in the industry as of 2014 for 30 years.
Karen Rodriguez, Realtor, ABR, CRS, e-Pro, SFR
Website: Soldbyk.com (Search ALL Greater Louisville and surround Counties Properties for sale)