Do your plans for 2014 include a new home? If you’re thinking about signing on the dotted line for a new mortgage this year, it’s important to understand the new federal regulations that go into effect on January 10.
While these new regulations will make it more difficult for some people to get a mortgage, it’s estimated by experts that less than ten percent of people will be negatively affected. Plus, most of the new regulations actually work to the consumer’s benefit!
If you’re a current homeowner or considering a mortgage during the next year, we recommend you visit the Consumer Financial Protection Bureau for more details.
Here’s a quick breakdown of some of the changes going into affect on January 10:
A New Class of Mortgage is Born: The Qualified Mortgage
The January 10 update define a new class of mortgages: Qualified Mortgages (QM). These are basically mortgages you’re assumed to be able to repay for many years – rather than just for a few months before interest rates change – if you qualify. Your ability to repay is based on factors like your income, assets, debts and credit history. To receive a QM, you must have a debt-to-income ratio (including the mortgage) of 43 percent or less. To learn more about Qualified Mortgages, visit the Consumer Financial Protection Bureau.
Better Customer Service
In the past, if you had a problem with your mortgage, lenders weren’t always equipped with the tools necessary to help you. Now, lender companies are required to set up systems that allow their employees to easily access information about your loan, making it easier to help you out if you’re having problems making your payments. Be aware of two key changes:
If you send a complaint in writing, the lender is now required to address the problem within 45 days or explain to you in writing why the problem cannot be fixed. Note: This only works if you write a complaint and send it via snail mail.
Lenders are required to send a monthly statement explaining exactly where your mortgage payment is going each month (i.e. escrow, loan repayment, interest, fees).
Credit Where Credit is Due
If your mortgage payment arrives on time, you’ll get credit for that! The lender can no longer “hold” your payment therefore making it late and charging you a late fee. Note: This is only true if you follow the lender’s exact directions. So if you’re supposed to use a tear-off coupon book, make sure you do that. Otherwise, they can hold your payment for five days, and you’ll have to pay a late fee.
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