Thinking about buying a home but worried about the federal mortgage rules that went into effect early this year? Don’t worry. While there have been some concerns that the changes will make it more difficult to qualify for a mortgage, the reality is that for most borrowers, it simply isn’t the case. In fact, the new rules, designed to make sure that home buyers are financially ready to purchase a home, offer a variety of benefits to home buyers.
Administered by the U.S. Consumer Financial Protection Bureau, the changes are designed so that home buyers have more information and protections when shopping for a loan. Lenders are required to make a “good-faith, reasonable effort” to determine that borrowers are likely to be able to repay their loan. That means lenders are required to check and verify income, assets, debts and credit history, to determine whether borrowers are financially ready to buy a home. Lenders also must make sure borrowers can afford the monthly payments on their loan along with all of their other credit obligations, such as car loans. It discourages loans with risky features and excessive fees. Sounds sensible, right? That’s what reputable lenders have been doing all along.
The new rules DO NOT require consumers to make only large down payments, have only excellent credit scores or take out only certain types of mortgage loans in order to purchase a home. Want to learn more? Here’s an informative guide to the myths – and realities – of this new consumer protection measure.