Hi all: I hope you're well! If you're in a sunnier clime right now, stay there. It's not cold here but it's raining to beat the band. We usually can expect this weather for a while now.
It's 2 Days until QM or the Qualified Mortgage. I have written on this topic previously. Beginning with the Dodd-Frank Act of 2010 and culminating with the new Qualified Mortgage, the mortgage industry has been completely revamped by our government.
I'm not saying this didn't need to happen. The days of easy money found earlier this new millenium also were partly to blame for the whole real estate meltdown that started near the end of 2006. With the new QM or Qualified Mortgage we are getting back to simpler guidelines and the burden of proof is more like it was in the old days.
When we bought our first and only home, the qualifying debt to income ratios were 28/36. That means 28% for your mortgage and a maximum debt to income ratio of 36%. I'm sure plenty of exceptions were made (it was in all likelihood a manual underwrite at that time in the early '90's) but if you compare it to ratios as high as 60% on loans in the early 2000's, there is a huge difference.
Today, qualifying ratios for a conforming, conventional loan (loan amount up to $417,000 in most places) are up to 45%. FHA and VA will often approve higher debt to income ratios. Jumbo loans may go to 45% although most jumbo lenders are more conservative.
On Friday, the new debt to income ratio for a QM loan is set to be pegged at 43%. Although there is no indication debt to income ratios will be approved above this, it appears that as long as a lender has an approval through either Fannie Mae or Freddie Mac's online system, you may be ok.
This much is clear. This will be a huge year for mortgage companies. There will be a lot of change in the form of mergers and companies going out of business. Frankly, in the almost 8 years I've been in business I've seen it all. I know we'll get through this too.
I hope you''ve enjoyed the read. Stay tuned for updates on the New QM or Qualified Mortgage. And if you have any further questions please
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