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When I first meet with a client, I always ask, “How comfortable do you feel paying a monthly housing obligation … including a mortgage payment, home insurance and mortgage insurance?” This is a different approach to the mortgage process and gets them talking in real numbers about their family finances. Typically, we wind up “backing” into the size of a house they can buy and the amount of a mortgage they can afford. I can’t remember when I’ve ever had an issue with a buyer’s “Ability to Pay.”
For everyone else, the Dodd-Frank Act created the Consumer Finance Protection Bureau which in turn created the proposed Qualified Mortgage. The CFPB’s QM regulations are meant to assure residential borrowers that their mortgage loan is right for them. Included in the regulations is the provision that the highest debt to income ratio on all mortgages is 43%. The 43% would be the total of the proposed housing expense, plus any, installment, credit card debts, alimony and/or child obligations as a percentage of the borrowers’ gross monthly income. Sounds like a good idea? … Right!
Now I am giving you a very simplistic overview here as there are many factors that affect a impact a families ability to pay. But, presently I am getting Conventional mortgages approved up to 45%: FHA and the USDA are insuring some loans with 49% to 55% ratios. These are very rough numbers, but you get the idea. What all this means is that many families will not be able to become homeowners or refinance when these regulations go into effect on January 14, 2014.
From everything I keep reading, there will be new players coming into the market to fill in the gap. This will be the new “Subprime Mortgage Market.” I can assure you, when private investors enter the market and cannot sell their loans through normal channels; it will cost the consumer much more money.
The Dodd-Frank Bill has created more jobs in Washington than any other government body to put these regulations together. I’m just not sure that it should be called the Consumer Financial Protection Bureau.
The Clockwork Repertory Theatre in Oakville, CT opens its 36th season with “The 39 Steps” an ingenious spoof on the Alfred Hitchcock movie adapted by Peter Barlow and directed by Harold Pantely.
The plot follows the wild adventures of Richard Hannay, played by Jonathan Jacobson, a handsome hero who has a knack for discovering murders, spies and pretty women. It’s a hilarious comedy with a plethora of props and a complex cast of actors/actresses who play multiple roles. “The 39 Steps” is definitely a departure from the norm for The Clockwork Repertory Theatre, but you won’t miss out on the entertainment. It’s community theatre at its finest.
Tickets are on sale now! “The 39 Steps” opens November 2, 2013 and plays each weekend through November 30. Tickets are only $19 now so call the Box Office at 860.274.7247 to reserve your seat today!
Mortgage Interest Rates are down this week to a new 4 month low, Conventional pricing is about 4.125% for buyers with good credit, a 20% down payment and the ability to pay all closing costs. FHA and USDA rates are around 3.750% with USDA being the market choice with its significantly lower mortgage insurance costs.
On the flip side, Housing prices are stable compared to their rapid appreciation earlier this year. The housing market continues to favor investors and other buyers paying in cash for distressed properties that appear to be appreciating in value.
Sellers have been waiting to cash in and the good properties will go quickly. I’ve already had 2 First Home Buyers this month who lost out in bidding wars for nice homes. Both had great credit and 20% down; they just couldn’t close as quickly as the competition because they weren’t Pre-Approved for a mortgage.
There’s still time to move into a new home by the holidays and take advantage of potential tax benefits this year. Now’s the Time to Buy!