Next year a new set
of mortgage rules amended to the Truth In Lending Act by the Consumer Financial
Protection Bureau will go into effect, no doubt changing the home buying
process. Here is a quick refresher course so that as a seller, you can know
what to expect in your future real estate transactions.
Overview:
Home buyers often
struggle to understand the type of monthly payment they can afford. If approved
for a mortgage bigger than their wallets, results are likely to be delinquency
& foreclosure, exemplary in the years leading up to the financial
crisis. The Truth In Lending Act was established to hold banks accountable for
the size of loans they approve & the documentation needed to support
lending.
New Rules:
On January 10, 2014 an amendment to Regulation Z will go into effect requiring lenders to look at a
consumer’s financial information and be sure the consumer has the ability
to repay that loan. This rule creates a category of more stable loans
called Qualified Mortgages and reduces the risk of reckless lender
tactics such as “teaser” rates, negative amortization & loan terms longer
than 30 years.
How this will
affect Home Sellers:
In the past five
years since the financial crisis, real estate agents have changed how they
qualify buyers drastically. Many agents now require proof of funds or a
pre-qualification letter from a lender before they will even meet a prospective
buyer to show the property. Expect more of the same with the new rules meaning
fewer showings, inquiries & offers for your real estate.
The Good News:
Loans often fall
through in the home selling process after the property has gone into Under
Contract status, cutting off potential buyers who may be more qualified to
purchase your “Active” property. Also, this new rule lessens the chance that
you will be tied up with tedious paperwork from buyers who are not financially
able to close your real estate transaction.
So while it may seem like you're not getting as
much traffic as you have in a previous transaction, it is important to be aware
of the changing mortgage laws and adjust your expectations accordingly.
Remember: “It’s Quality Not Quantity.”
We also offer plenty of
real estate tips online! Be sure to follow us on Facebook, Google+, Twitter,
& Pinterest as
well as subscribing to this blog. We’re always sharing our market-insider tips
on DIY renovations, home staging tips, and Atlanta market trends to keep you
ahead of the competition. Not to mention the money you’ll save in commission
prices!
Please feel free to post
comments, send emails, visit our social media pages and the House Connect website, or call
us directly at 770-640-6800 for more info. We have dedicated, knowledgeable
professionals waiting to assist you with listing your Atlanta real estate
without the pricey commissions.
**House Connect is a Metro Atlanta flat fee MLS listing agency offering an alternative to the high cost of
selling your home. We offer a discount realty service which saves Atlanta home owners
thousands of dollars versus using the traditional real estate company.
