Mortgages insured by Housing and Urban Development or HUD
proposed the new Qualified Mortgage definition.
To help protect consumers from high interest rates and unnecessary fees
and points, lets break it down on what this new definition means:
- No excessive term more than 30 years
- New limit on upfront points and fees for all Title II FHA insured SFR (no more than 3%)
- Qualified mortgage will have an APR greater than APOR + 115 basis points, plus ongoing mortgage insurance premium.
- The SAFE Harbor Qualified Mortgages will be loans with APR’s equal to or less than the APOR + 115 basis points and ongoing mortgage insurance.
Hud hopes these new rules will
serve to assist creditworthy borrowers looking to purchase real estate and also
help protect and serve the general public from high risk loans. The ability for a potential home owner to
repay the mortgage debt will be evident in the underwriting guidelines moving
forward with the new rules.
If you are not yet familiar with
some of the updates to the changes with Mortgage rules, then we suggest you
visit the Consumer Financial Protection Bureau or CFPB for short. As of January 10, 2014 the amended Regulation
Z & Truth in lending act will limit the prepayment penalties and must in
good faith determine a consumer’s ability to repay the mortgage. There are a number of changes that have or
will go into affect starting in January 2014.
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