Homes For Sale in Las Campanas-Rates at a Glance

There has been a lot of speculation on how the new Qualified Mortgage (“QM”) rules may affect new borrowers, whether purchasing or refinancing.    The rules say that lenders must make a “reasonable, good-faith determination” that the borrower can repay their loan.  The basics of a QM is that the loan term is no longer than 30 years, and certain fees and points total no more than 3% of the loan value.  QM also set another standard of “not higher than a 43% debt-to-income “(DTI”) ratio (including housing, credit card debt & student loans).  However, if the borrower receives an automated approval from Fannie Mae, Freddie Mac or by other federal agencies (FHA, USDA), exceeding the 43% DTI is allowable and acceptable by most lenders.  This QM DTI over-ride will be effective until 2021.  (And, many times, according to auto underwriting results, only one tax year may be required, rather than two years of tax returns.)

Fannie Mae has allowed up to 50% DTI, and Freddie Mac has allowed even more, according to the auto underwriting findings our clients have received since the Jan 10^th rule went into effect.  Most significant in these “higher-than-QM DTI guideline” approvals are (1) credit scores and (2) cash reserves.  Call us for some thoughts on immediate credit score improvements, if your borrower is feeling credit-score challenged.