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3 Things You Need to Do Now to Buy a Home Next Year | Credit.com

3 Things You Need to Do Now to Buy a Home Next Year | Credit.com

With big changes coming to the mortgage industry at the beginning of next year, many consumers will want to evaluate their home-buying plans. Regulations drafted by the Consumer Financial Protection Bureau will change the definition of a qualified mortgage for any loan applications received on and after Jan. 10, and many consumers may find themselves unable to meet the new requirements.

Qualified mortgages are loans that meet certain standards designed to ensure that borrowers are highly likely to be able to pay back the amount in question.

Facing this challenge, it’s up to the hopeful homeowner to improve their chances of mortgage approval by doing the necessary research, improving their credit profiles and meeting the qualified mortgage standards well in advance of filling out loan applications.

It’s important to meet qualified mortgage standards because government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac have said they won’t buy non-qualified mortgages starting next year, said Joshua Weinberg, senior vice president of compliance with First Choice Lending/Bank. Fannie and Freddie don’t lend to homeowners directly, rather they purchase mortgages from banks and then bundle them into securities and sell those securities to investors.

For lenders that originate mortgages with the intention of selling them to the GSEs, as many do, originating non-qualified mortgages won’t be feasible. Other lenders own the mortgages they originate, meaning they don’t have to worry about selling them to GSEs, and such larger portfolios could probably take on non-qualified mortgages. WHAT CHANGING? Read More>>>

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