Courtesy of RISMedia 7\/19\/10<\/p>\n
Homeowners and buyers who are sitting on the sidelines should get moving today, unless they want to get blindsided by the impact of a new law,\u201d said Gibran Nicholas, Chairman of the CMPS Institute, an organization that trains and certifies mortgage brokers. \u201cThe massive financial reform law that just passed Congress has two main components that could very negatively impact homeowners and home buyers in the future.\u201d<\/p>\n
Harder to qualify for a mortgage<\/b><\/p>\n
\u201cThe new law dictates certain guidelines that lenders must follow when making loans,\u201d Nicholas said. \u201cSome of these guidelines are simply a copy of the current situation. However, now that the guidelines are built into law, lenders will find it even more difficult to loosen their guidelines once the economy and housing market improves.\u201d For example, consider a business owner with a very high 750 credit score, plenty of equity in their home, no history of late payments, and plenty of cash in the bank. If this responsible homeowner experienced a loss in their business last year, they may be prevented from qualifying for a home mortgage under the new law because of the temporary decline in income from their business. The new law requires lenders to document a borrower\u2019s income, but it does not specifically state the terms under which loans can be made. \u201cRegulators may address this ambiguity when writing the regulations implementing the law,\u201d Nicholas said. \u201cHowever, if they don\u2019t, many lenders will be tempted to tighten their guidelines even further in order to err on the side of caution and stay in compliance with the new law.\u201d
Higher mortgage rates<\/b><\/p>\n
\u201cThere are two sections of the law that will cause mortgage rates to increase in the future,\u201d Nicholas said. \u201cThe new law requires lenders to keep a 5% stake in the mortgages they originate unless the loans meet a certain criteria. This means that lenders won\u2019t be able to offload some of the higher risk associated with these loans, and interest rates on these types of loans will go up.\u201d For example, homeowners who have had financial or credit challenges due to divorce or bankruptcy, business owners with fluctuating income, and other homeowners and buyers who fall \u201coutside the box\u201d may need to pay higher rates on their home loans in the future. \u201cAlso, the future of Fannie Mae and Freddie Mac remains uncertain,\u201d Nicholas said. \u201cThe market doesn\u2019t like uncertainty, and mortgage rates could go a lot higher in the future depending on when and how the issue of Fannie and Freddie is resolved.\u201d<\/p>\n
\u201cTo be clear, there are a few positive elements to the bill,\u201d Nicholas said. \u201cThese include consumer protections involving pre-payment penalties and loans originated in states that have laws that prohibit lenders from pursuing judgments against homeowners who owe more than the value of their homes. However, the main takeaway for homeowners and buyers is that mortgage rates are currently very low, and lending guidelines are not as bad as they could be once the new law goes into effect. This means that if you can qualify for a mortgage now, you should do so, and not gamble your homeownership goals on the future impact of the new law.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Courtesy of RISMedia 7\/19\/10 Homeowners and buyers who are sitting on the sidelines should get moving today, unless they want to get blindsided by the impact of a new law,\u201d said Gibran Nicholas, Chairman of the CMPS Institute, an organization that trains and certifies mortgage brokers. \u201cThe massive financial reform law that just passed Congress […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-81","post","type-post","status-publish","format-standard","hentry","category-real-estate-news-tips"],"_links":{"self":[{"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/posts\/81","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/comments?post=81"}],"version-history":[{"count":0,"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/posts\/81\/revisions"}],"wp:attachment":[{"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/media?parent=81"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/categories?post=81"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jurus.net\/juliemeggat\/wp-json\/wp\/v2\/tags?post=81"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}