For Buyers, Mortgage & Financing
Do I Qualify For This Mortgage?
December 6, 2009 by Monica McNamara · Leave a Comment
Buyers, make sure you qualify for the mortgage loan you will be obtaining to purchase your home or condominium. The rules to qualify seem to be changing almost daily.
When you apply for a mortgage, most (if not all) lenders will sell your loan to the secondary mortgage market (a/k/a Fannie Mae or Freddie Mac). In order for you to be approved to borrow monies, there are debt to income ratios (as well as other things) that are used to determine your ability to repay. Today we are talking about changes to these ratios.
In the past, there had been some leniency in Fannie Mae’s debt to income ratio. Fannie Mae is making changes that will affect your borrowing power. They had been allowing up to a 55% total debt to income ratio. Effective sometime this week (week of 12/7/09, they love to keep us guessing), they will be changing this ratio to reflect a total debt to income not to exceed 45% for almost all scenarios.
What does this mean to you the borrower? Well, the obvious is that you will either have to earn more money or have less existing debt in order to qualify for the same amount of a mortgage that you did as recent as last week.
If you had been pre-approved for a mortgage loan and have not yet secured your loan, you will want to contact your real estate agent and your lender and have them re-evaluate your qualifying criteria to make sure that you can still borrow the same amount of money.
Stay tuned. There is probably more change in store in the wonderful world of banking.
As an aside, don’t let this newest information be a deterent in making your property purchase. The overall benefits of owning a primary, secondary or investment property, far out weigh some of the push ups we now have to go through to obtain that goal.
