By Ken Janzen
The August 19th Arizona Republic Business Section contained an article entitled “Low rates out of reach for most Arizonans.” Fortunately, that’s not necessarily true!
Although the main news story is certainly timely and reasonably accurate, the “What it takes to qualify” box that follows the article contains several statements that could potentially and inadvertently discourage some homebuyers from looking for a new home or existing homeowners from applying to refinance.
Specifically, the myths are:
- Front-end ratio: The proposed mortgage payment must be no more than 31 percent of the buyer’s gross annual income.” FALSE! Every borrower is unique and evaluated individually; all facets of the profile are considered. An acceptable “Front-end” ratio frequently exceeds 31%.
- Back end ratio: Consumer debt must total no more than 43% of the buyer’s gross annual income.” FALSE! Total debt to income ratios are often approved at levels in excess of 43%; although potential borrowers should carefully consider the true affordability of high debt ratios.
- No late payments: The buyer cannot have made any payments more than 30 days late on credit cards, rent or a mortgage within the past two years.” Once again, FALSE! Multiple late payments over the past couple of years may preclude some borrowers from being approved, but isolated late payments will not prevent most applicants from obtaining a new home loan.
The take away is to always consult with an experienced, qualified, licensed mortgage originator. You may be pleasantly surprised by what you hear!
Ken Janzen is a Senior Mortgage Consultant with the Counsel Mortgage Group®, LLC. He would be happy to guide you through the new regulations. You can contact him at email@example.com. Copyright 2010© Counsel Mortgage Group®, LLC