Affordability in the Housing Market for 2014

Affordability will be key in the 2014 Housing Market. With new inventory coming on and a plethora of buyers already looking for their dream homes, there will be plenty to go around for everyone, as long as buyers can get financing.  The economic experts have been predicting a rise in mortgage rates for 2014. That forecast is due to a few different aspects of current economic trends in the US. New laws surrounding Qualified Mortgage loans were enacted the tenth of this month in order to create safer loans by prohibiting or limiting certain high-risk products and features. Housing groups worry that changes meant to shield Americans from abusive lending practices that contributed to the financial crisis will make it harder for many to buy homes. But experts say the rules will create sustainable homeownership by ensuring that borrowers can afford to repay their home loans.

The new rules include the following:

• Loan terms not to exceed 30 days
• No Interest only loans
• No Balloon Loans
• Monthly Debt to Income Ratio (DTI) not to exceed43.00%
• Adjustable Rate Mortgage (ARM) qualification: use either a fully indexed rate or an introductory rate, whichever is higher for 7/1 and 10/1, start rate  +2.000% for 3/1 and 5/1
• Ability to repay**

**The final rule describes certain minimum requirements for creditors making ability-to-repay determinations, but does not dictate that they follow underwriting models. At a minimum, creditors generally consider eight underwriting factors:

1. Current or reasonably expected income or assets
2. Current employment status
3. The monthly payment on the covered transaction
4. The monthly payment on any simultaneous loan
5. The monthly payment for mortgage-related obligations
6. Current debt obligations, alimony, and child support
7. The monthly debt-to-income ratio or residual income
8. Credit history

For further information on mortgage rates or if you need any questions answered please feel free to visit our webpage MarinRealEstate.net and get in contact with one of our experts!