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What You Need To Know About The Qualified Mortgage Rules
Here is a simplified explanation of what QM is all about and how it will affect you and your buyers when applying for a mortgage, beginning January 10, 2014.
Mandatory Product Features for all Qualified Mortgages (QMs):
- Points and fees are not supposed to exceed 3% of the loan amount based on:
- The 3% limit is for loans that are $100,000 or higher
- $3,000 for loan amount between $60,000 and $99,999
- 5% of total loan amount between $20,000 and $59,999
- $1,000 for loan amount between $12,500 and $19,999
- 8% of total loan amount for loans less than $12,500
- No risky features are allowed (i.e. negative amortization, interest-only, or balloon loans
- Maximum loan term must be 30 years or less
- Definition of QM Loan - any loan that meets product feature requirements with a debt-to-income ratio of 43% or less
- Types of QM Loans - FHA, VA, Conventional (Fannie/Freddie), and USDA
- Small Creditor Category of QM Loans - If a Mortgage Company, small community bank, or credit union that has less than $2 billion in assets, originates 500 or fewer first mortgages per year, AND holds the loan in their portfolio, the 43% doesn’t apply, but they must still verify the borrower’s ability to repay the loan.
- Underwriting will be more strict
- More documentation will be required
- Pre-approvals become MORE important than ever - VanDyk Seller Assurance!
- Re-verification of income, credit, and assets will be required before closing
Fred Duff, NMLS#835831 is the Regional Relationship Manager for VanDyke Mortgage and is known for his insight into the mortgage industry. You can reach him with questions by phone at (502) 298-9584 or by email.
For more information contact your Eco-Broker below.
Rick Hogue REALTOR, CDPE, Eco-Broker
The Hogue Group a part of Keller Williams Realty Louisville East
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