February 15, 2018 | By RGR Marketing Blog

Everything You Need to Know About 2018’s New Mortgage Rules

Every year new mortgage rules and policies come into play. With 2018 marking the second year of the Trump administration, there are expected to be some major changes upcoming. As a mortgage professional, you need to keep an eye out for potentially changing mortgage policies, so you can provide your customers with the most up-to-date information.

Here is everything you need to know about the changes that are expected to be taking place in the mortgage industry in early 2018.

People With Student Loans Can Qualify Easier

In the past, a prospective home buyer who was saddled by student loan debt faced an uphill climb over rocky terrain on their journey to mortgage approval. But, recent policy changes have made it easier for these buyers to qualify.

Previously, a borrower with a student loan on an income-driven repayment plan proved to be particularly challenging for underwriting departments. Lenders used 1% of the student loan balance when calculating a borrower's debt-to-income ratio, rather than the actual payment amount. The problem with this rule was that an income-driven repayment plan tends to elevate the borrower’s debt-to-income ratio.

Under the new rule, lenders can use the actual payment amount if the student loan payment shows up on the borrower's credit report and is greater than zero. In addition, if a prospective buyer is having her loans repaid by an employer, a family member, or some other third party, then the student loan payments can be excluded from her debt-to-income ratio. That is, if she can supply written proof to the lender that the third party has made her student loan payments for at least the last 12 months.

Mortgage Loan Limits Are Rising

Loan limits have increased to their highest point since 2006. Currently, the standard loan limit is $424,100, which is up from 2016’s $417,000. Loans over this limit are categorized as jumbo loans and as a result will feature higher interest rates than standard loans.

Meanwhile, in certain parts of the country and in non-contiguous parts of the U.S., loan limits can be set at $636,150, or 150% of the standard loan limit (due to the high cost of living).

Fannie Mae’s HARP Program Is No More

The Home Affordable Refinancing Program (HARP), has long been the refinance program used by Fannie Mae. But, HARP has now been replaced by a new program that is designed to make it easier for homeowners to qualify for refinancing.

Unlike HARP, the new program allows a homeowner to refinance multiple times, and there are no loan origination cut-off dates or loan-to-value limits. All that is needed to qualify is for the homeowner to have made at least 12 on-time payments, have no 30-day-late payments in the last six months, and have no more than one 30-day-late payment in the last year.

Even homeowners who are “underwater” with their current loan can qualify, thus allowing them to replace their existing loan with one that’s more beneficial and affordable.

There May Be More in Store for the Mortgage Industry…

These are three of the policy changes we know about right now. Others may or may not follow as the year progresses, but one thing is certain – mortgage companies are under constant pressure and success is earned. Ensuring your business is on the same page as the new policies are implemented is a major step in the right direction.

If you’re looking for some near-guaranteed business this year to combat the new changes in the industry, then consider buying high quality mortgage leads from RGR Marketing – we’ll walk you through the entire process, ensuring you get the most from the leads you purchase.

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