If you’re in the market for a new home, it’s going to become more difficult to get a loan in 2014. If you do get a mortgage, you’ll qualify for a lot less than expected.
Most people are not aware of the problem yet. We’ll all start hearing more about Dodd-Frank Mortgage Reform setting stiffer lending rules for 2014.
The biggest thing is that debt-to-income ratio. It’s going to be tighter. Right now, you can go up to 50 percent of your gross income. That will drop to 43 percent of your gross income in 2014. How does that affect you?
Say for example you make $60,000 a year. Add in a $500 a month car payment and $100 a month credit card payment. Right now, you’d qualify for a mortgage up to $190,000. But when the new reform act kicks in next year, you’ll only qualify for $160,000. And then, you might not even qualify at all. As Realtors, we run into that number quite a bit, where people are in that 46, 47 percent, 48 percent. And if we can’t go over 43 after January, then that’s going to hamstring a lot of people.
So why the change?
They’re really trying to just protect the consumer. Because there was a time when things were just way too loose. In the new year expect to put more money down, or find a cheaper home.
One last thought. There are many programs for first time home buyers. Also, there will be more creative ways to mortgage a home to help buyers. Here in the Hunterdon and Warren areas, most properties can be bought with a USDA mortgage. Before you go out to look for a new home, it is imperative that you first get pre-qualified and pre-approved.
I like being affiliated with Weichert because we have divisions to help both buyers and sellers. If you need help finding the right mortgage for you, give me a call. I have many resources to put you in touch with.
Visit me at my website at http://www.NormaSellsNJHomes.com