Earlier this year, the Consumer Financial Protection Bureau (CFPB) announced a rule that requires lenders to make sure buyers can repay their mortgage loans (ability to repay rule). Lenders will now be required to issue “qualified mortgages,” as they’re called by the CFPB.
Now that banks have clearer guidelines, you will have to make sure you’re financially capable in order to qualify for a new loan or to refinance your existing loan. You’ll need a good credit score, low debt, and a secure income in addition to a large down payment. If you’re looking for a loan this year, be sure to plan ahead and ensure you’ll meet these guidelines.
Chief economist at Trulia, Jed Kolko, said “There’s now more certainty and when banks have more certainty about what their legal or financial risk is and have more clarity of what’s considered a safe mortgage and what’s not, they’re likely to be more willing to write safer mortgages and less willing to write the mortgages that are deemed unsafe.”
Interest rates are still low and a little lower than what they were at this time last year, 3.62 compared to 3.87 percent on a 30-year fixed loan. This is not a trend that’s expected to continue according to industry experts. Now would be a good time to lock in the lower rate.
Kolko said, “Rates are more likely to go up than down, because of Fed policy [to purchase mortgage-backed securities], they’re not likely to go way up, but they’re likely to rise if the economy continues to recover.” Congressional Budget Office data recently released confirms there could be an increase in mortgage rates if the economy continues its growth.
With these current low interest rates, many homeowners can now afford shorter repayment terms on their loans. As previously stated, you will need to act fast to continue to see a savings on the lower interest rate. You can end up paying thousands more over the loan of the term, if you don’t take advantage of the low interest rates pretty soon.
According to the Credit Union National Association (CUNA), buyers are becoming more interested in short-term loans so more lenders are offering 10-year mortgages. Over time, a 10-year loan will save you even more than a 15-year loan. U. S. Bank advertised a rate of 2.5 percent for a 10-year just this month. With a loan like this, you pay $222,248 for a $200,000 loan, which is a savings of $98,000 when compared to a 30-year loan.
Courtland Building Company would love to help you plan your green home, call us today: (281) 932-4494
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