7 Questions You Need to Ask About the New Qualified Mortgage Rules

How changes can affect your mortgage:

Mar 22, 2014 at 10:43AM

After a tumultuous few years in the housing market, the rules are starting to change – for the better. Here are seven frequently asked questions about the new 'qualified mortgage' rules and answers about how it affects your mortgage:

1. Who Created Them And Why?
These new rules were released in January 2014 by the Consumer Financial Protection Bureau (CFPB). These are guidelines and regulations make sure that home loans are safer, involve fewer unexpected surprises, and provide regulations on how these loans are serviced.

2. What Is A Qualified Mortgage?
A Qualified Mortgage meets the CFPB standard that a lender must determine whether a borrower will be able to repay the loan — not just in the short run, but over the term of the mortgage. Meaning , he or she must be qualified to pay the monthly payment both in its initial rate – and at the highest rate that could occur over the life of the loan.

3. How Much Income Will I Need To Qualify?
Your total monthly debt-to-income ratio will need to be no higher than 43%. That means that when you add up mortgage payments, taxes insurance and other debt like credit cards or car loans, that debt total has to be less than 43% of your annual income.

4. Are These New Rules A Benefit To Me?
Yes, they are designed to make the loans that are offered safer, with fewer surprises!  For example, there are now restrictions on risky types of loans such as negative amortization loans, interest-only mortgages and artificial up-front teaser-style loans that put so many people into loans that that they could afford initially, but not when the payments later adjusted higher.

Another benefit is limits on some of the costs involved in getting a mortgage, including points and other fees that lenders often charge. Now, the maximum amount can't exceed 3% of the size of the loan.

5. Will It Be Harder For Me To Get A Mortgage – And Will Some Homebuyers Be Eliminated?
If you meet these new qualified loan standards, no, it will not be harder to get a mortgage. But yes, meeting these new standardized minimum requirements may be more challenging. This does not mean you or other buyers are going to be eliminated from home buying. The adjustments you can make to help qualify for these standards are: reduce some of your debt in advance of home purchasing, shop for a slightly lower priced home, or plan for a larger down payment.

6. Is This A Good Thing For The Housing Market?
Yes! When you qualify homebuyers and put them into houses they can actually afford, you help to stabilize the marketplace with fewer defaults and foreclosures. In the long run, it will help to regulate that artificial run up of home prices that happened in the bubble – and will encourage new homebuyers to purchase homes they can safely afford.

7. Once I Become A Homeowner, How Will These New Rules Benefit Me?
Homeowners will now have to receive a monthly statement showing exactly how their payments were credited. If you have an adjustable-rate mortgage, your statement has to tell you in advance when, and to how much, your rate is going to change. Also, if you fall behind in payments , loan servicers will now have to wait four months before starting a foreclosure proceeding. This will give you time to request a loan modification. Once you have a loan modification, foreclosure or short sale help, the loan servicer can't simultaneously move forward with a foreclosure proceeding – you have the right to assistance from the mortgage servicer to help you with your options!

This article originally appeared on Trulia.com

Finding the right answer and opportunity
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

Michael Corbett is Trulia's real estate and lifestyle expert. He hosts NBC's EXTRA's Mansions and Millionaires. In additional to his regular segments on ABC's The View and Fox News, he is a national best selling author with three critically acclaimed real estate books: Find It, Fix It, FLIP IT!; Ready, Set, SOLD! and Before You BUY! Follow him on Twitter @1MichaelCorbett

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers