Hello. Jillian Batchelor here, with the Batchelor Group in Las Vegas, Nevada. Are you a buyer looking to buy a home and not sure how the new financing conditions in the market are going to affect you?
Well, five things any borrower should know about the QM (Qualified Mortgage) and lending guideline changes are this:
#1) It is meant to reduce risky mortgage loans. The Qualified Mortgage rules are designed to reduce the number of high-risk home loans.
#2) It will become the gold standard for mortgage loans. The QM rules will have a broad effect on the mortgage industry. When they are finalized and implemented, they will essentially set the bar for minimum qualifications on home loans.
#3) It will focus on the borrower’s ability to repay. In short, lenders must take reasonable steps to ensure borrowers have the financial means to repay their loans. Translation: No more low documentation or no documentation loans, also known as stated income. As stated income legislation, lenders must verify and document the income and financial resources relied upon to qualify the obligators to the loan. The lenders must also access the borrower’s debt-to-income ratio or D.T.I. to ensure the current debt load won’t interfere with the borrower’s ability to repay
#4) It has led to rumors of 20% down payment requirements. Nothing gets the rumor mill cranking like information void. Unfortunately, that’s what we are seeing with Qualified Mortgage rules. There actually was a proposal for a 20% down payment requirement across the board. But it spawned a backlash of opposition from a variety of interests. Everyone from the labor unions to the real estate agents denounced it.
#5) It’s not the same as Qualified Residential Mortgage. Many bloggers and even a few journalists have used the terms Qualified Mortgage and Qualified Residential Mortgage interchangeably. They do sound the same, after all, but they are two different things. The former has to do with underwriting standards while the latter has more to do with risk retention. Think of Qualified Residential Mortgage, (Q.R.M.), as the extension of Qualified Mortgage, QM. Borrowers should be most concerned with the definition of Q.M.. Since it will affect their ability to qualify
for a home loan. The Q.R.M. criteria has less to do with the consumers and more to do with Wall Street.
The Q.R.M. rules determine which loans are subject to the 5% risk reduction requirement imposed by Dodd-Frank and which ones are exempt from that requirement. In short, lenders can sell 100% of loans that meet the definition of the Qualified Residential Mortgage.
Now, if you are a buyer looking to buy a home in Las Vegas, there really has never been a better time to buy than NOW! Interest rates are still at practically the lowest rates out there and lenders are funding more purchase loans than ever before. But you need a professional Realtor that understands the market more than ever. Here at the Batchelor Group, we will guide you through the process of home buying and find the home that is right for you.
Thank you so much and again, I’m Jillian Batchelor with the Batchelor Group. We would love the opportunity to work with you.
You can reach us on the web day or night at: http://www.lasvegas1realestate.com. Or please feel free to call us at 702-823-3801 – Seven days a week.