If you’re not a first-time homebuyer and are buying a home for the first time in recent years, you may be a surprised by the information and documentation that will be required by your lender. Don’t be frustrated – these extra steps were put into place for YOUR protection.
The Consumer Financial Protection Bureau (CFPB) was formed in July of 2011, and this Federal agency regulates the consumer financial laws – including mortgage laws – and also educates and empowers consumers to make better informed financial decisions. The CFPB enacted the Ability To Repay Rule in 2014 to insure that mortgage applicants were truly qualified for the loans they were obtaining and to help prevent consumers from purchasing homes they simply could not afford.
While many lenders have always followed this practice, even before the rule was enacted, the CFPB has made this an industry-standard requirement.
You can expect your mortgage company to consider all of the following:
- Current or expected income, employment status and assets used to repay the loan;
- Projected monthly mortgage payments including any second mortgages taken out;
- Monthly payments for taxes, insurance (both property and mortgage), HOA and/or any other monthly payment associated with maintenance of the property
- All debts to include revolving, installment, alimony, and child-support payments;
- Monthly debt-to-income ratio using the total of all of the mortgage and non-mortgage obligations as a ratio of gross monthly income for more informations on this Click Here ;
- Credit profile and historySimply said – be prepared to provide paperwork to support income, assets and debts you list on your application………help your lender protect YOU.