Ready to move or refinance? If you’ve owned a house for more than five years, then it’s time to brush up on the latest and biggest changes in the housing market, including:
- Your “ability to repay” KC home loans
- The consequences of less stringent down payment requirements
- The upcoming HARP expiration date
Qualified Mortgages & Ability to Repay
Much of the 2007 mortgage crisis was triggered by lenders giving mortgages to people who had no chance of repaying, resulting in mass foreclosure. Since then, the government has required lenders to meet qualified mortgage (QM) guidelines to ensure the borrower will be able to pay their mortgage.
This change means that you will go through a more intense process to prove your ability to pay. Whereas before your income and credit score would be the primary factors in getting approved for KC home loans, you will be expected to give a much more thorough analysis of your accounts to attain a qualified mortgage.
Down payments for KC home loans are not as strict as they used to be. While this allows many people with less savings available to get a loan, beware of KC home loans that promise low down payments with no strings attached. Low down payments can lead to higher interest rates, private mortgage insurance, and larger monthly payments.
The temporary Home Affordable Refinance Plan (HARP) is set to expire at the end of 2015. This is a great opportunity to refinance your home for a low rate and reduced payment. Currently you have the opportunity to compare lenders to get the best refinancing deal. However, once HARP expires, you still have the option of refinancing your home with a qualified lender.