Dodd-Frank Regulations and Your Mortgage

Mortgage application

According to Scott Morgan at the Dodd-Frank Regulations mortgage regulations might make it harder to qualify for mortgage loans.

At first glance, qualified mortgage requirements may seem scary but in fact, better qualified buyers will create a more stable mortgage/real estate market. Due to the slightly more conservative debt-to-income ratio requirement, affordability may be reduced in Silicon Valley. However, demand is driving the affordability challenge more than mortgage requirements. If a buyer has up to a 43% DTI ratio, they should feel confident in their pursuit of a home and a mortgage in the Bay Area. 

How do you calculate your debt-to-income ratio?
“To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out. For example, if you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a month for the rest of your debts, your monthly debt payments are $2000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent. ($2000 is 33% of $6000.)” via ConsumerFinance.Gov

The best way to understand your affordability is to sit down with a professional and discuss your current finances and housing goals. Buying a home in Silicon Valley is once again a very viable investment in your future. For more information on Qualified Mortgages, download this helpful PDF

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