If you thought about buying a new home or refinancing your existing one, you might want to consider doing so before the end of the year as some of the lending rules will become much stricter in 2014, says lending expert Michelle Scott, president of Luxury Property Lending in Newport Beach/Long Beach/Beverly Hills. For instance, there will be new limits as to how much you can borrow (no more than 43% of your monthly income towards your mortgage) and you will need to document things more thoroughly. You can also say goodbye to “no-doc loans” and super-low adjustable rates to help you qualify. Also, adjustable rates will no longer help you qualify for bigger loans. Scott says it’s all part of the government’s crackdown on lenders to help stabilize the housing market.
“While frustrating to some, such measures are part of the new world of mortgage lending,” says Scott. “Lenders are under more scrutiny and borrowers adhering to these new rules ultimately will be more financially responsible.”
If you’re thinking about buying/refinancing a home, Scott recommends the following:
Find out what's happening in Beverly Hillswith free, real-time updates from Patch.
· PAY DOWN DEBT – Pay off your credit cards, if possible. If not, whittle the total balances to 8% of your household monthly net income.
Find out what's happening in Beverly Hillswith free, real-time updates from Patch.
· DON’T MAKE NEW PURCHASES – Thinking about buying/leasing a new car? Will your new house need new appliances? Does a vacation sound nice just about now? Forget it. You will almost certainly sink your chances of obtaining a loan.
· STAY IN YOUR CURRENT JOB – Lenders need to perceive job stability so they can feel comfortable that you will pay the mortgage. Don’t accept a new position until after you’ve closed the deal on your home.
· COME ARMED – Bring any documentation to your lender that shows stability on your part e.g., payroll stubs, proof of bonuses/sales incentives, letter from the boss showing how valued you are at work.
· SHOP AROUND – While all of the big lenders must adhere to the new rules, small community lenders are exempt so first-time borrowers might have more luck there. Also, small lenders are given more latitude to take into consideration local real estate conditions and other factors that make them more appealing to the borrower.
With more than 25 years in the home loan business, Michelle Scott founded 21st Century Home Loans with the intent of helping people from every walk of life despite race, class, economic level or any other demographic element to achieve their dream of home ownership. Unlike large lending institutions where clients are treated like a number and subject to interminable delays, unnecessary red tape and a lack of experience with junior staff, 21st Century Home Loans helps clients get loan approval before they start the house-hunting experience and take them all the way through until they receive the keys to their new homes. For more information, visit www.21lending.com or call (800) 778-8077
