Today, we have a guest blogger, Amanda Benson, with Angel Oak Funding, LLC in Winter Park, FL. Given Amanda’s expertise in the mortgage market, we are deferring to her for experienced, tested, and newsworthy updates in the mortgage industry.
Today, I wanted to update you on the new changes regarding QM, or Qualified Mortgage, as outlined in the Dodd-Frank act. These changes are in effect as of January 2014 and will affect how loans are underwritten. Here are the highlights:
QM at a glance –
A qualified mortgage (QM) is a home loan that meets certain standards set forth by the federal gov’t. The QM mortgage rule, as defined by CFPB, the Consumer Financial Protection Bureau, is designed to create safer loans by prohibiting or limiting certain high-risk products and features.
LIMITS ON LOAN FEATURES:
No negative amortization loans
No interest only loans
No balloon payments
Loan Term may not exceed 30 years
POINTS AND FEES CAP:
Generally 3% of the total loan amount
Up to two additional bona-fide discount points allowed depending on rate
Higher caps allowed for loans less than $100,000
Max rate in first 5 years after 1st payment with full amortization
Consider & verify income or assets
Consider and verify current debt obligations, including alimony & child support, if applicable
DTI ratio cannot exceed 43%
If you ever have any questions about this, or any other mortgage loan related topic, please feel free to reach out and I’d be happy to try to get you the information you seek!
Licensed Mortgage Advisor
Angel Oak Funding, LLC.
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