For the last month or so, I have been writing about the upcoming changes to the mortgage industry due to the Dodd-Frank legislation which was passed a few years ago. Tomorrow, the next round of changes go into effect, and they will have some pretty major consequences on a select subset of borrowers; namely, those who fall outside of the parameters for a “qualified mortgage.”

A qualified mortgage, as I discussed last month, is one which fits within the “ability-to-repay rule.” Loans which fit within these parameters are those which have less than a 43% debt-to-income ratio, loan fees of less than 3% of the total loan size, and which are not “toxic” loan types (balloon, negative amortizing, etc.). So, if you have a standard sized mortgage and have a debt ratio under 43%, then you will not see a major impact to you, except perhaps higher interest rates, which could be a secondary effect of these regulations.

But if you have a small loan size, it will be difficult to keep the fees under 3%. You must also be careful if you are trying to buy a house at the top of your budget, as your top-end budget might have just diminished due to these regulations.

If you are looking to buy a house in the coming months and want to be sure that the new Dodd-Frank regulations will not impact you, please contact me and I will go over your individual situation. If you have anything to add about the new Dodd-Frank regulations and what their impact will be over the next few months, please leave a comment.