Qualified Mortgage Rule Changes and the Southern Ocean County Real Estate Market
Southern Ocean County Real Estate
The Consumer Finance Protection Bureau has created a Qualified Mortgage Rule (QM) which goes hand-in-hand with Ability-to-Repay rules (ATR). These changes are important for anyone looking to buy a house with a mortgage in the Southern Ocean County real estate market. For more detailed information, it is best to speak with a mortgage representative.
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Changes to the Qualified Mortgage Rule
In a nutshell, here’s a simplified explanation of what QM is all about and how it will impact borrowers when applying for a mortgage loan starting January 10, 2014.
The Mandatory Product Features for all Qualified Mortgages (QMs) are as follows:
1. Points and fees are not supposed to exceed 3% of the loan amount based on the following:
The 3% limit is for loans that are $100,000 or higher
$3,000 for a loan amount between $60,000 and $99,999
5 percent of the total loan amount between $20,000 and $59,999
$1,000 for a loan amount between $12,500 and $19,999
8 percent of the total loan amount for loans less than $12,500
2. No risky features are allowed, such as negative amortization, interest-only, or balloon loans
3. Maximum loan term must be 30 years or less.
The three main categories of a QM loan are as follows:
1. General Definition of QM Loans – any loan that meets the product feature requirements with a debt-to-income ratio of 43% or less
2. Types of QM loans – FHA, VA, Conventional (Fannie & Freddie) and USDA
3. Small Creditor Category of QM loans – If a mortgage company, small community bank or credit union that has less than $2 billion in assets originates 500 or fewer first mortgages per year AND holds the loan in their portfolio, the 43% does not apply, but they must still verify the borrower’s ability to repay the loan.
Mortgages in the Southern Ocean County Real Estate Market
A mortgage is an essential part of any real estate transaction and there is much to understnad when looking for a mortgage in any real estate market. It is important not to “over borrow” and it is equally important to understand your financial limits. To get started feel free to contact us or visit our partner, Van Dyk Home Loans for more information.
The Beach Haven West Real Estate Group and Southern Ocean County Real Estate Specialists
Farrah Pileggi 201-952-4131| Kim Pileggi 732-887-4853 | Nathan Colmer 609-290-4293