Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Home financing regulations have become a little more clear. New federal rules—which are intended to prevent the risky loans that sank the housing market—went into effect Jan. 10, and consumers may need to do a bit more work to get a mortgage.
The QM rule is designed to ensure that lenders only make loans to borrowers who can repay them, meaning you may have to do more to prove that you really can afford that home loan.
Here is what you need to know about the new rules:
You may have trouble finding “riskier” loans. The QM rules make it more difficult and more expensive for borrowers looking for alternative financing (such as the risky loans available during the housing boom).
That’s because under the new rules, if a lender makes risky loans—those that require borrowers to spend 43 percent or more of their household income to make mortgage payments—that lender would need to accept a portion of the risk on the loan.
In many cases, lenders may be more hesitant to make riskier loans knowing they could be responsible if a borrower defaults.
Additionally, total points and fees cannot exceed 3 percent of the total loan amount, and loans cannot have any negative amortization or balloon features that make it difficult for borrowers to meet payments.
You must be able to repay your loan. Under the new rules, a borrower’s debt-to-income ratio—how much is owed compared to how much the borrower makes—cannot exceed 43 percent when the mortgage is included.
You may still be able to get a loan if you’re above that debt-to-income level, but you may face more challenges, mostly in terms of documentation.
Under the QM terms, lenders must verify borrowers’ income and assets. This can lead to a lengthier approval process, and may pose certain challenges for self-employed buyers.
Down payment requirements will remain strict. The QM rule doesn’t set any down-payment requirements, but buyers may still find they need to put down a substantial sum of money to stay within the 43 percent debt-to-income ratio.
Buyers who can’t afford a higher down payment can consider FHA loans, but these can be problematic in higher cost markets. Recently, FHA announced it would reduce loan limits in the highest cost markets to $625,500, down from $729,750. If a homeowner needs a loan above $625,000, they may have to get a jumbo loan, which in general requires a 20 percent down payment.
Steve Cook is editor of Real Estate Economy Watch, and is a member of the National Press Club, the Public Relations Society of America, and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate companies, financial services companies, and trade associations, including some of the leading companies in online residential real estate.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.