Here’s what you need to know about changes in the real estate and mortgage industry.

New changes on qualifying mortgages.

Qualifying mortgages cannot have interest-only periods, cannot have negative amortization, cannot exceed 30 years and cannot have a balloon payment at the end of the term. The only exception is for those living in a rural or under serving areas.

Borrowers may have a more difficult time qualifying for a loan.

Over the last 2 to 3 years, low income and distressed borrowers have had it easy. Finding a mortgage or loan, especially if you’re a first-time homebuyer, has been easy with lots of options when it comes to down payment or closing cost assistance programs, zero to low down payment and even being able to apply for a loan than two years after a short sale or foreclosure. The types of borrowers may find it more difficult to apply for a home loan. On the other end of the spectrum, those that are self-employed or do not have a steady flow of income may find it more difficult to prove their income and have to jump through more hoops in order to apply for a home loan.

The debt to income ratio is decreasing.

The debt to income ratio has been 50% which is relatively high. This debt would include a mortgage payment, any car loans or student loans, credit card debt, and any other secured or unsecured loans. This percentage is dropping to 43% as of January 1, 2014. That may mean several borrowers will either need to bring their debt to income ratio lower or wait to purchase a home.

The new “ability to repay” rule.

This is a new loan category for qualifying mortgages and will have the biggest effect on self-employed individuals. Those who are self-employed often have uncertain, seasonal, or fluctuating income. Lenders are often hesitant to lend to these individuals.

So what does all this mean for new homebuyers in 2014?

“Unless the applicant can demonstrate stable or increasing income, his or her chances of obtaining a mortgage may be poor. Under the new rules, it’s unclear whether and how much leeway lenders might have two make business decisions about making loans.”

My suggestion is if you plan on buying a home do so before the end of the year. We will have to wait and see how these new mortgage plans play out in January. [Source]

The multiple benefits of a mortgage refinance – What to take into consideration

Are you someone who is struggling with the mortgage payments? If answered yes, you need not worry as you can choose to take out a mortgage refinance loan with which you can get back on track. Refinancing is nothing but taking out a new mortgage loan that carries favorable interest rates and monthly payments. As the current mortgage rates are pretty low, this is considered as the best time to refinance your home loan and if you’re not aware of them, you might gain enough information from the concerns of this article. Check out the benefits that you should consider.

Change the interest rates on the loan: The interests on the current mortgage loan are the biggest reason behind the large number of defaults and the foreclosures that are taking place in the nation. If you’re suffering under the high interest rates on the mortgage loans, you can opt for a refinance as the new loan will probably carry lower rates through which you can save a considerable amount of money. However, you need to ensure that you take out the loan that carries the lowest rate so as to make the highest amount of savings.
Lower the monthly payments: As the interest rates on the new refinance loan will be lower than what you were paying, you can save a lot of money. As all of us have a huge amount of debt obligations to repay in a particular month, it becomes impossible to manage all of them at the same time and therefore when you can save your dollars, it becomes easier to repay the mortgage loan debt.
Change the type of loan: The type of loan that you take out may also become a burden for you. If you had taken out an adjustable rate mortgage and you’ve been subject to very high monthly payments, you can certainly refinance into a fixed rate mortgage loan so that the monthly mortgage payments remain fixed throughout the term of the loan and you can manage your finances in a better manner.
Extend the repayment term of the loan: When you’re getting tired due to the high monthly mortgage payments, you should try taking out a new refinance loan that amortizes throughout a longer period of time. By taking out such loans, you can ensure lowering the monthly payments. With a loan that is extended over a longer period of time, the monthly payments will be much lower and therefore you can be able to save enough money.

Therefore if you wish to take out a home mortgage loan with better rates and conditions, choose to take out a refinance loan when the mortgage rates are lower. You just have to ensure that you shop around and choose a loan that will lower the monthly payments and help you save your dollars.

Your Florida and Orlando Expert

I love living, working and playing in the area and if you love it just as much, give us a call to find your perfect dream home in the Orlando real estate market. I help buyers and sellers in Winter Garden, Clermont, Minneola and all over the Orlando area. Where know where to live in Orlando!

Real Estate Changes Coming in 2014

Here’s what you need to know about changes in the real estate and mortgage industry.

New changes on qualifying mortgages.

Borrowers may have a more difficult time qualifying for a loan.

The debt to income ratio is decreasing.

The new “ability to repay” rule.

So what does all this mean for new homebuyers in 2014?

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The multiple benefits of a mortgage refinance – What to take into consideration

Your Florida and Orlando Expert