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Can You Still Qualify for a Loan Under QM?

QM ATR

Do “QM” and “ATR” mark the end of the road for home buyers and sellers? These “Qualified Mortgage” and “Ability to Repay” standards, required by the Dodd-Frank Act, became effective January 10th.

Some reports claim these standards will make borrowing extremely difficult, but the truth is the QM/ATR rules will impact some more than others. If you’ve been through the mortgage process in the last few years, you have probably already experienced QM-level underwriting.

What are some examples of changes under QM/ATR? Certain “low documentation” loan types, loan terms longer than 30 years, and “interest only” or “negative amortization” loans do not qualify for QM status. Actually, these loans haven’t been widely available in recent years anyway, as focus returned to traditional loans and underwriting. Even with stricter loan standards, we’ve seen most markets improve.

You may experience a difference if you’re self-employed or most of your income comes from a source other than a regular salary. Examples include commissions or bonuses; interest and dividends; stock options; or drawdowns from retirement funds. 

If your income is sufficient, stable and can be documented, then it’s likely little will have changed for you.

If you or someone you know is planning to purchase or refinance in the near future, I’ll be happy to discuss the new rules and their potential impact. Please contact me using the information found here.

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