Self-employed? Making good money? You may not qualify for a home loan after January 10,2014

New mortgage rules come in to effect on January 10th 2014 thanks to our favorite fools on the hill Dodd and Frank. Yes the guys who collapsed the market in the first place by removing most regulations.

The rules are already in place in many lending institutions, January 10th is the final date that all institutions must comply by,.

Ability-to-repay rule states the following.

Lenders must prove that income and assets are sufficient to repay the loan (this applies to jumbo loans as well).
Borrowers must be able to document their jobs.
Credit scores will have to meet a minimum standard.
Borrowers will have to be able to show that they can also still afford other debts associated with the home, such as home equity loans as well as property taxes.
Lenders will consider borrower’s other debts before issuing a mortgage too, such as student loans, car loans, and credit card debt.
Monthly payments must be affordable to the borrower.
Home buyers who fail to qualify for a “qualified mortgage” can still get a mortgage, but mortgage payments must not be more than 43 percent of the borrower’s pre-tax income.

Rules also state

Qualified mortgages cannot have interest-only periods;
2. Qualified mortgages cannot have negative amortization;
3. Qualified mortgages cannot exceed 30 years;
4. Qualified mortgages cannot have balloon payments at the end of the term, with a limited exception for those living in a rural or underserving areas (although who defines that I’m not sure);
5. Qualified mortgages cannot exceed forty-three percent (43%) of a borrower’s monthly pretax income; and
6. Borrowers must provide proof of income or assets.

The key is monthly income, you have to demonstrate a stable monthly income. We clear 100k a year in bad years but I can not prove a stable monthly income, I can go 3 or 4 months with out making a penny then bank 60k in 3 weeks. I’m seeing lenders close business already

[link to www.avvo.com]

[link to www.trulia.com]

I pay my 50k in taxes a year and they are going to tell me I can’t get a loan now in a 200k house.
Used to prove income with a few years of tax filings, not anymore.

Just f’ing great…

This is about one thing getting the government to take over more of the mortgage industry.

Last Edited by Chrit on 10/10/2013 03:13 PM