The Homeowners And The New Mortgage Rules – What’s In Store For Them?

Irrespective of whether you blame the ignorant homebuyers or the shady mortgage lenders or even the Wall Street traders, it is a clear fact that the numbers of homebuyers and homeowners who can’t afford their homes are staggering. According to reports by RealtyTrac, around 11 million homeowners are badly underwater on their mortgages. Amidst such a grim financial situation in the mortgage market, the CFPB or the Consumer Financial Protection Bureau introduced a new set of mortgage rules to safeguard the homeowners against the predatory lenders. If you’re someone who is about to take out a mortgage loan, you need to be cautious about the new rules and how they affect you.

Sweeping changes that the potential borrowers will face

The changes have been brought in order to ensure that the lenders are aware of the fact that the borrowers only take out a mortgage when they can afford it. Borrowers now require crunching their numbers through their mortgage calculators so that they don’t get a mortgage that they can’t pay back on time. Here are some of the biggest changes that the borrowers might expect in 2014.

  • The lenders will scrutinize your financial documents: If you haven’t been in the mortgage market for a pretty long time, be prepared to be shocked at the level of questioning from the lenders. You will need to spell out all your financial documents. While this can have a negative impact on the borrowers, the lenders will certainly get to ensure that the prospective borrower is capable of repaying the mortgage on time.
  • The process of approving a mortgage will take longer time: Four among six big mortgage lenders are of the opinion that both in-branch and phone interviews will most likely take longer time. In fact, Lloyds Banking Group predicted that presently a phone interview might last till 2 hours. However, this will depend on the present financial situation of the borrower. Hence, you need to apply for a mortgage loan way before you actually need it.
  • Borrowers will find it tough to crack a deal: With stringent terms on getting a mortgage and will stricter credit score requirements, the new borrowers will certainly find it very tough to crack a deal with the mortgage lenders. Be sure that you can fulfil all the requirements before applying for a mortgage loan so that you can avoid any unnecessary harassment.
  • Homeowners may not get a new deal: On the other hand, the homeowners who are looking forward to a remortgage might get trapped with an expensive loan. Although the FCA says that there are some rules that can be waived by the lenders, yet this would only be possible when the borrowers don’t increase the loan amount.

Therefore, if you’re a prospective homeowner, you need to set the strongest foot forward. Make sure you have a stellar credit rating and enough proof of a stable job and sufficient monthly income. Lower your debt-to-income ratio if you don’t want to be rejected by your mortgage lender. Stay aware of the new rules and act accordingly.

Jimmy Simond is a founder of, he share his immense knowledge of finance in this blog.