What are the “Ability to repay” rules about?
In a nutshell, as this video shows, new laws require lenders to make a good-faith assessment of a borrower’s capacity to pay back their loan over time.
It’s a longer-term view that goes beyond immediate income, debt and credit rating.
These new Federal laws- supervised by the CFPB – require lenders to ask more questions –
about income, assets, employment, credit history, and monthly expenses –
as they relate to the proposed loan.
For example, a lender offering a mortgage with a low initial rate must try to assess how a borrower will handle the later, higher rate as well.
If you’re applying to borrow ask whether the program you’re considering is a Qualified Mortgage
Ability-to-repay rules are built in to loans that meet Qualified Mortgage guidelines.
What Are The Major Types Of VA Loans?
Major Veterans Affairs loan programs described in this video include:
1) Purchase Loans.
These help eligible parties buy a home at competitive interest rates with little to no down payment and little or no private mortgage insurance.
2) Cash Out Refinance Loans which enable taking cash out of home equity to pay off debt, fund school or make home improvements.
3) Interest Rate Reduction Refinance Loans also called Streamline Refinance Loans can help veterans obtain lower interest by refinancing existing VA loans
Other programs include:
4) Native American Direct Loans to help eligible Native American veterans finance homes on Federal Trust land.
5) Adapted Housing Grants to help veterans with service-connected disabilities buy, build or modify a home suited to their disabilities.
Many states offer additional resources to veterans, too.
Talk to your home lender about your situation.
The video puts this in more visual terms, but basically, contact the local Chamber of Commerce for promotional literature or talk to your real estate agent about welcome kits, maps, and other information.
You can get information about school systems by contacting the city or county school board or the local schools.
You may also want to visit the local library. It can be an excellent source for information on local events and resources and the librarians will probably be able to answer many of the questions you have.
This video tells you about it all. PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers.
These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility.
PMI’s usually have stricter qualifying ratios and larger down payment requirements than the FHA but their premiums are often lower and they insure loans that exceed the FHA limit.
If your loan is approved, on the terms you requested the creditor is required to provide a Loan Estimate within 3 business days.
If they determine that your application will not or cannot be approved they do not have to provide a Loan Estimate.
Likewise, if you withdraw your loan application within that period they do not have to provide the Loan Estimate.
However, if the creditor does NOT supply the Loan Estimate in the required time approving and issuing the loan later under your original application terms will make them non-compliant with TRID Regulation Z.
Well, as this story shows, this will likely be the first opportunity to examine the house without furniture giving you a clear view of everything.
Check the walls and ceilings carefully as well as any work the seller agreed to do in response to the inspection.
Any problems discovered previously that you find uncorrected should be brought up prior to closing. It is the seller’s responsibility to fix them.