Last week, the Consumer Financial Protection Bureau announced new rules, known as the Qualified Mortgage (or QM for short), for mortgage financing. This new regulation, while creating a safer harbor for the lenders, reducing their risks, drastically impacts homebuyers and their ability to obtain loans.

At the start of 2013, lenders will face stricter guidelines in getting their loans approved. This translates into additional safeguards, additional manpower, additional fees and costs to borrowers. The rules will require tighter qualify control requirements for lenders including full documentation of applicant’s income, assets, employment, credit history, etc.

Plus, the Dodd-Frank Law in effect, limits points for qualified mortgages at 3 percent of the loan. This could heavily impact large lenders and home builders who provide incentives for home owners and use affiliated companies for their services, such as appraisers, title and surveyors.
Also affected are jumbo mortgages, which could affect higher end home sales in Counties and Cities with higher sales figures such as Coral Gables, Miami-Dade and Palm Beach. Jumbo loan limits in Florida counties are classified as follows:

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Under the new regulations, to achieve safe harbor status, a loan must not have a debt-to-income ratio in excess of 43%. David Stevens, Chairman and President of the Mortgage Bankers Association estimates that “between 22 and 25 percent of all jumbo loans that exceed those limits, have DTI’s beyone that cap” thereby they will be affected.

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So, a few tips to make financing your home easier and allowing you to escape this bureacacy:

● Preserve your credit and keep your credit scores high
● Put down at least a 20% down payment on your purchase
● Avoid PMI mortgage insurance
● Use a qualified mortgage banker or broker to find the best possible programs and loans
out there for you based on your particular situation.

And the best advice of all… don’t go it alone.

Hire a qualified attorney to handle your closing! By hiring an attorney and accountant, you pay no more than a title company would charge BUT get additional services from a qualified professional including

● Review of Good Faith Estimates provided by mortgage brokers to check fees and costs

● Review and examination of title on the home you are purchasing to make sure title is free and clear of all encumbrances
● Preparation of the Closing Statement HUD-1 to make sure all charges are accurate
● Attendance at closing and review of all lender documents including mortgage and note

Contact me for more information on our real estate closing services.

Jacqueline A. Salcines, Esq. 305|669|5280

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