What is the Dodd-Frank Act?

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Congress enacted the Dodd-Frank Act in 2010 in response to the mortgage crisis that led to America’s Great Recession.  The two parts that apply closely to homebuyers are the Ability-to-Repay (ATR) and Qualified Mortgages (QM).

A Qualified Mortgage is a category of loans that have certain, more stable features that help make it more likely that borrowers will be able to afford their loan.  These loans do not allow certain risky features like an interest-only period when no money is applied to reduce the principal; negative amortization that would allow the mortgage balance to increase; and, “balloon payments” at the end of the loan that are larger than the normal periodic payments.

A debt-to-income ratio of less than or equal to 43% has been established to provide a limit on how much of a borrower’s income can go toward total debt including the mortgage and all other monthly debt payments.  However, the Consumer Finance Protection Bureau believes these loans should be evaluated on a case-by-case basis and in some cases, can exceed 43%.

There is a limit for up-front points and fees the lender can charge.

By showing that the lender made an effort to be certain that the borrower has the ability to repay the loan, the lender in turn, receives certain legal protections.  Underwriting factors considered by the lender include:

  1. current or reasonably expected income or assets
  2. current employment status
  3. the monthly payment on the covered transaction
  4. the monthly payment on any simultaneous loan
  5. the monthly payment for mortgage-related obligations
  6. current debt obligations, alimony, and child support
  7. the monthly debt-to-income ratio or residual income
  8. credit history

For more information, see the Consumer Financial Protection Bureau fact sheet … protecting consumers from irresponsible mortgage lending.

Ways to check to see if you are wasting water.

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No one wants to waste water or money.  For that reason, take a few minutes every other month to do the following inspections:

  1. Check to see if cutoff valves on sinks and toilets are working properly.

    Many times, builders will put individual cutoffs on supply lines to sinks and toilets.  It is reasonable to expect them to work but after some time, they can corrode which prevents opening and closing.  It is a good idea to test them occasionally before you need them in an emergency.

  2.  Fill each sink with a few inches of water to see if they drain in what you feel is a normal time.

    A slow-draining sink can be an indication of a clog that builds up around the insides of the pipe.  Common causes are food, grease, hair and soap scum.  Plunging can take care of some slow-running sinks.  After partially filling the sink with water, seal the plunger over the drain and pump it up and down a few times.

  3.   Inspect each toilet to see if they are leaking water from the tank into the bowl.

    Toilets that continue to run after being flushed can use a large amount of water in a month’s time.  Generally, the problem comes from a flapper that doesn’t seat properly.  Sometimes, the chain is keeping it from closing properly or the flapper itself may need to be replaced.

    Another issue could be that the flush valve needs to be replaced.  These can be purchased at Lowe’s or Home Depot for about $20.00 and are relatively easy to change out.  There are lots of instructional videos on the internet and it can save money if you give it a try.

If you need a recommendation for a good plumber to take care of something you discover, please feel free to call me at (830) 708-7199.

Can Procrastination cost Buyers more money in buyinghomes?

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Whether it is hesitation or procrastination due to uncertainty, it can cost buyers by having to pay more for both the house and the financing.  This is one of those markets where most of the experts expect interest rates and prices will continue to rise through 2019.

The National Association of REALTORS® reports there is currently a 4.2-month supply of homes for sale which is close to the same as last year’s inventory.  Normal inventory is considered to be a 6-month supply.

If during the period you’re waiting to buy, the price of the home goes up by 5% and the mortgage rate increases by 1%, the payment on a $275,000 home with a 95% mortgage could be $233.80 more each and every month.  Over a seven-year period, the delay to purchase would total close to $20,000.

To act decisively, you need good information; a confused mind will not generally make a decision.  In today’s market, you need to know exactly what price home you can qualify for and you need to know what kind of home you can expect for that price.

You’ll want a housing and a mortgage professional you can trust to give you the information you need to make good decisions for yourself and your family.  We’d like to be your real estate professional and can recommend a trusted mortgage professional.

To get a better idea about what it may cost you for a home in your price range, use the Cost of Waiting to Buy calculator.  If you have any questions, call me at (830) 708-7199.