On January 10, 2014, new mortgage lending rules went into effect. How will these new restrictions affect residential mortgage lending in 2014?
These new restrictions issued by the Consumer Financial Protection Bureau will mean that more borrowers will be under more scrutiny by underwriters with longer processing times, yet there may be some reprieve for credit scores and debt limits in 2014.
New requirements will impact borrowers in specific ways. First, mortgage lending companies will determine if a borrower can return payment over the lifetime of the loan. And to put an end to risky loans, lenders are now required to have documentation of credit score, income, debt, and a full credit history.
To protect borrowers, these new rules will restrict what is called steering, or recommending loans that a family cannot afford. And there is no minimum down payment or credit score requirement, which may benefit borrowers. Borrowers will benefit from no minimum down payments, which will make it easier for new homeowners. Still, do not expect many loans to be approved with credit scores below 620.
Historically low mortgage rate will begin to rise this year. And as 2013 drew to a close, foreclosure rates were at a 6-year low, with less short or quick sales.
As we begin 2014, new home sales are expected to rise.
Are you looking to sell your home this year? Check out these great tips from guest contributor Geralin Thomas to stage your home.
“Mortgage Lending is Our Business: Customer Service is Our Passion.”
Stay tuned and stay in touch with your mortgage professional. Thank you for the opportunity to serve you.
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