February 25th, 2014
We’ve all mentioned ways to speed up the mortgage process like maintaining clear records of your finances (including extra deposits like that holiday present from your Great Aunt). But in today’s post, we’re going to look at ones that you may not be as familiar with.
The Consumer Financial Protection Bureau created new consumer rights as part of the mortgage rules that went into effect January 1, 2014. On their website, they have a table listing the new rules, the compliance guide, and videos for you to watch, download or read the transcriptions. But what you’re going to be more interested in is their frequently asked questions. They also have a pull down menu for information specific for students, older Americans, service members and veterans, and credit unions and community banks.
A reputable mortgage officer will be able to answer your questions. They spend a large amount of time researching and staying on top of new government regulations.
When you’re thinking of buying, spend time cleaning up your credit (if needed), pay down your credit cards, and start spending more wisely. Lenders do not want to loan money to applicants who have very little money left over after paying their mortgages and other obligations like car payments. This is known as debt to income ration (DTI). Lenders tend to look for people who are able to keep this ratio below 43%. But what you probably don’t know is that they’re not looking at your current expenses but rather your projected ones that include the mortgage and property taxes, and PMI if needed.
Most first-time homebuyers look for FHA loans because of lower down payments and somewhat less strict underwriting standards. What they don’t know is that this comes at a price. The interest rate will be a little bit higher, and the borrower will have to pay for mortgage insurance. What’s new in 2014 is that the mortgage insurance stays for the life of the loan.
Talk to a reputable mortgage loan officer with your questions. The loan officer has access to a wide variety of loans, and can help you find one that works best for your situation.