Borrowers usually don’t know whether or not they are getting a loan that meets QM requirements unless they are told they can’t get a loan because of new regulations and the lender explains the details. But it is helpful for certain borrowers, including some who are self-employed and those seeking larger loans, to have access to lenders that go outside the QM lending box.
Discounts on FHA Loans
Homebuyers with small down payments have long relied on FHA loans, or loans insured by the Federal Housing Administration. But the cost of mortgage insurance on FHA loans increased significantly in recent years and it’s an obstacle to many borrowers.
The government is trying to ease some of that burden for borrowers who are willing to go through housing counseling before they purchase a home.
“It’s a pretty decent discount that you would get,” Walsh says. “If you get a $200,000 loan, you are going to save $1,000 upfront and 10 basis points yearly.” On that same loan, that would translate into about $17 per month in savings.
“For people that are aware of it, it would be crazy not to take advantage of this program,” Walsh adds.
“Plus, the counseling service should help people understand what it really means to buy a house.”
Home Prices Take a Summer Break
The spring homebuying season wasn’t as good as people in the industry had expected.
But for now, home prices seem to be taking a break. That’s good news for those planning to buy a home this summer.
Part of the reason home prices have increased so rapidly in some places is a shortage of homes available for sale, experts say.
“In the New York City area, rents are so high and there’s still tremendous demand for buying,” Grabel says. “But people are getting stretched already. I don’t think that can continue much longer.”
Investors and institutional investors also have contributed to higher home prices as first-time homebuyers get squeezed out of the market, Hsieh says.
“We are in an unsustainable recovery,” he says.
Polyana da Costa is the senior mortgage reporter for Bankrate.com. Visit Bankrate online at http://www.bankrate.com.
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