Chicago Tribune – Mary Ellen Podmolik
New lending rules, fluctuating mortgage interest rates and slowly rising home prices haven’t dampened enthusiasm for home purchases, but the combination is prompting a question from consumers to lenders. Do I qualify? "It’s a different environment for the consumer than the last time we were in a robust purchase market," said Joseph Tunk, BMO Harris Bank’s director of mortgage sales for Illinois. "The last time, they went to a real estate agent first and looked at homes. (This time), they want to talk to us first. There’s a lot of curiosity, even by the people who’ve been through it before.
They aren’t quite sure how all the changes impact them." That curiosity and concern revolve around stringent loan requirements that took effect in January as part of the Dodd-Frank Wall Street reform package. It also has to do with new costs tied to Federal Housing Administration-backed loans, mortgage interest rates that economists expect to keep inching higher and recovering home prices. All of it is affecting affordability. About 80 percent of lenders who participated in a recent survey by the American Bankers Association said they expect the new regulations to measurably reduce lending. While affordability is a growing issue, potential buyers need to keep in mind that when affordability was unusually high a few years ago, it was because low home prices were accompanied by historically low mortgage rates.
The rise in rates and prices is causing some urgency on the part of many buyers, but according to Trulia chief economist Jed Kolko, the answer to the question of loan qualification will be a definitive no for some consumers. First-time buyers are expected to continue to have difficulty participating in the recovery.
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