Amy Slotnick, Margaret Szerlip
Dodd Frank, QM, ATR…yikes! I can hear all of you moaning in pain just thinking about the mortgage process. Thankfully, I have Amy Slotnick of Fairway Mortgage to clarify and simplify the experience.
Dodd Frank– The Dodd Frank Wall Street Reform and Consumer Protection Act requires lenders to take more consideration when making mortgage loans.
QM — simply means Qualified Mortgage, the long and short is that loans can no longer contain high risk features such as interest only, negative amortization, balloon payments, or a loan term longer than 30 years. In my humble opinion these are all good.
ATR — The ability to repay?! Wasn’t that always part of the criteria for a mortgage? Basically, this ATR will make sure you have the ability to repay a loan you can afford, eliminating teaser ARM loans with a cap of 5%. Meaning that after a 5 year period on a 5/1 ARM your rate can no longer jump from 3% to 8%. You will now be pre-approved based on the higher rate.
In order to receive a pre-approval your lender will want to see your W-2 or pay stub. The lender must consider 8 types of information.
1. Your current income or assets
2. Your current employment status
3. Your Credit history
4. The monthly payment for the mortgage
5. Your monthly payments on other mortgage loans you get at the same time
6. Your monthly payments for other mortgage-related expenses such as property taxes and home insurance
7. All other debts
8. Your monthly debt payments, including the mortgage, compared to your monthly income (debt to income ratio) or how much money you have left over each month after paying your debts (residual income).
All of you monthly debt cannot exceed 43% of your pre-tax income. There are NO exceptions to this..43.01% will be disqualified.
Buyers? GET PRE-APPROVED, by a reputable bank. Sorry to say this but PLEASE PLEASE NOT BofA! So many transactions involving Bank of America are a nightmare…my opinion. Make sure your agent understands the new complexities and how to draft an offer that makes your offer more compelling to a seller, especially in this multiple offer enviroment.
Sellers? Make sure you have a smart agent! Make sure agent is protecting you.
Fairway Independent Mortgage is putting their money where their mouth is!
Fairway has always offered a pre-approval that is a guarantee of a closing due to our complete, thorough, 360 degree evaluation of the applicant’s financing ability. (For info on a pre-approval vs. pre-qualification letter, click here).
We review all income and asset documentation to ensure that we have a complete financial snapshot and have not overlooked anything that could potentially derail a transaction further down the road.
Ninety percent of our loans are underwritten in house, with more complicated transactions getting a full underwriter review. In short, we will not issue a pre-approval without fully evaluating all aspects of the transaction.
(If the property is a condo we will review the condo details to ensure that the property meets all secondary market guidelines).
Now we are strengthening that guarantee even more by “Putting our money where our mouth is!” A pre-Approval letter from us is a guarantee of a closing-or we will reimburse up to $5,000 in related costs!
Certified Pre-Approval Guarantee: Closing Loans On Time, Under Budget, With No Surprises
Fairway will issue and guarantee the accuracy of “Fairway Certified” pre-approvalsas long as:
· The borrowers personal financial qualifications stay the same or improve
· The agreed upon loan parameters stay the same or improve
· The property meets all necessary loan requirements
If we are wrong we will:
· Reimburse documented short-term moving, relocating and/or storage expenses up to a maximum of $1500
· Reimburse any documented lost home inspection or appraisal expenses up to $1000
· Reimburse any forfeited earnest money expenses up to $5,000
Before you get started, check out our handy document check-list
Our complete Promise to the real estate community print document, including theFairway –Certified pre-approval, can be found here.
Call Margaret Szerlip at 617-921-6860 or e-mail me at email@example.com of you are looking to buy or sell a home.