What the New QM Rule Means for your Chicago Mortgage

If you’re curious about the new changes to

mortgages for 2014 (the QM rules) and how they are going to affect your chances at financing Chicago real estate this year, the Equifax Finance Blog has everything you need to know. While the changes just went into effect on January 10, they should not be too surprising to those that have been paying attention to mortgage reform over the past few years.

Be prepared for the following when you go to apply for a mortgage this year:

• Down payment requirements will remain strict in 2014. The QM rule doesn’t set any new 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. As always, more is better, and a 15 to 20 percent down payment is a great way to get ahead or stand out in a multiple offer situation.
• Loan types have been hit with a clean slate. The QM rules make it more difficult and more expensive for borrowers looking for alternative financing, such as the larger and riskier financing options available during the housing boom. This is because loans that require borrowers to spend more than that 43 percent debt-to-income ratio require lenders to accept a portion of the risk on the loan. In addition, the total points and fees cannot exceed three percent of the total loan amount.
• Your ability to repay must be assured. With a stricter control on the debt-to-income ratio allowed under the new rules, a borrower’s debt-to-income ratio is more tightly regulated and there are more challenges in terms of documentation. Lenders must verify borrowers’ income and assets. This can lead to a lengthier approval process, and may pose certain challenges for self-employed buyers or those who have recently made career changes.

The Equifax Finance Blog has lots more information on what steps to take for the best mortgage, ways to protect your

credit score, plan for retirement and much more.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.