2. Due to the collapse of the housing market, a new rule announced is aiming
to prevent the return of high-risk no-document home loans. This has only
happened now and for the very first time, federal regulators are enforcing
out rules to make sure borrowers can afford to pay the cost of their
mortgages. The Consumer Financial Protection Bureau will necessitate
lenders to offer loans that don’t ensnare borrowers. Late this yaer or early
next year if the new law takes effect, upfront fees will be limited and
interest-only loans will be curtailed. Lenders would be obligatory to
verify and inspect borrowers’ financial records.
Today’s current strict credit standards would not tighten but the new rules
are intended the kind of no-holds-barred lending that was seen during the
housing bubble before 2008. Loading homeowners with burdensome loan
payments would do anymore; financial firms are banned to do so. They
cannot require the borrower to pay the total more than 43 percent of their
income. But this on the other hand could make it harder for people with
lower incomes to qualify for a mortgage if banks are tempted to ease their
requirements.
3. According to the Mortgage Bankers Association, four out five home loans are now “re-
fi’s.” Most 30-year fixed rate mortgages are close to record lows and are well under 4
percent. A cheap rate can make a big difference over time. “At the end of 30 years you
can save thousands upon thousands of dollars in total interest,” says Pat Esswein of
Kiplinger’s Personal Finance. Refinancing usually makes sense “if you will stay in
your home long enough to recoup the closing costs that you have to pay to do the re-
fi.” To calculate re-financing costs and long term savings, Esswein says “go to an
online mortgage payment calculator and see what you can save by reducing your
interest rate.” The rumble in re-financed mortgages is projected to continue this year.
Read More Risky Home Mortgage Loans New Ban
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