posted on Apr, 15 2014 @ 11:30 AM
I'm in the process of buying a home and going through the loan process. This is my first time buying a home and I know nothing of real estate law or
various kinds of loans. But I'm learning fast!
When I found a home that I liked and was within my price range, I thought, my real estate agent sent me to Wells Fargo where their agent set me up
with an FHA loan.
An FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan which is provided by a FHA-approved lender. FHA
insured loans are a type of federal assistance and have historically allowed lower income Americans to borrow money for the purchase of a home that
they would not otherwise be able to afford. en.wikipedia.org...
The problem was a new law, called the Dodd-Frank Act, the “Ability-to-Repay". Before January 2014, the FHA lenders determined the loan amount a
person may qualify for by determining their debt to loan ration. Debt refers to things like your monthly minimum credit card payments, car payments,
etc. So, when lenders look at your finances, they can't offer a loan that will exceed 43% of you monthly income after considering all of your debts,
including the new FHA loan.
But now that the ACA has mandated everyone must have health insurance, and it's no longer your choice to buy it or not, your health care premium is
now part of your debt ratio. For that reason, many people with low to medium incomes, including myself, can no longer qualify for many loans.
But while the regulations are intended to benefit consumers, some experts say that, like the Affordable Care Act, the changes may lead to
complications and unintended consequences.
One example they cite is a provision in the rule that requires borrowers’ debt to make up 43 percent or less of their gross income.
“People who are right on the line of qualifying right now may not qualify in 2014” because of the policies set by Dodd-Frank, says David Zugheri,
executive vice president of Envoy Mortgage in Houston.
According to my agent, the ACA has knocked the middle class right out of the investment real estate market. I had no idea!
Fortunately, conventional loans don't have such requirements, yet, and I was able to procure a conventional home loan for the house I like. We've put
in an offer! (It's a foreclosure) Fingers crossed!
edit on 15-4-2014 by windword because: (no reason given)