According to a recent article written by Holden Lewis for Bankrate.com, mortgage rates are near historic lows, but lenders are continuing to make it harder to get a home loan.
One year ago, for example, the mortgage index seemingly was 6.39 percent, it was 5.32 percent four weeks ago, and this week a 30-year fixed-rate mortgage can be obtained at 5.19 percent (the all-time low was on April 1 of this year at 5.13 percent).
According to the article, Fannie Mae and Freddie Mac have gradually been tightening lending standards over the past several years and now are about to impose tighter restrictions on the total amount of consumer debt that borrowers will be allowed to carry—otherwise known as the total expense ratio, total debt ratio or back-end debt ratio, and is calculated by adding up all of the borrower’s monthly debt payments such as mortgage, home equity loan, car loan, student loans, credit card payments and so on, and then dividing that total by the monthly before-tax income.
Whereas back-end debt ratios of 55 percent or even higher are typical for most borrowers under current guidelines, the author notes that on December 12 the maximum total expense ratio for most borrowers will be 45 percent, and only borrowers with a high credit score and owning lots of equity in the house may get up to 50 percent.
The article also points out several other conditions that make it more difficult for borrowers such as raising the minimum allowable credit scores for all purchase and most refinance loans from 580 to 620.
Plus, all borrowers will have to sign a document that gives the lender permission to request transcripts of the borrower’s federal income tax filings so they can review your tax records to find out if you told the truth about your income in past years.
Finally, Fannie imposed a new rule whereby that you can no longer apply for a mortgage based on the co-applicant’s “anticipated income,” the author says. In other words, if you move to take a new job and your spouse hasn’t yet found a job, you’re out of luck unless your income alone qualifies for a loan.
Be sure you keep up with real estate news, articles and resources posted like this daily on www.jamkeskobzeff.com
