With the implementation of new mortgage rules that took effect on January 10, 2014, home buyers may discover a few new challenges in securing a mortgage as lenders will have additional restrictions in place to ensure that borrowers will be able to repay their mortgage loans.
Gone are the days of creative financing that would help unqualified borrowers buy a home. Gone are mortgages extending beyond 30 years. No longer can home owners opt to pay less than the full monthly interest on their loans; no more balloon payments; and no more fees and points that add up to more than 3 percent of the loan.
These new mortgage restrictions were developed as a cautionary reaction to the housing boom when it seemed as though anyone who could verify income qualified for a mortgage. Many economists believe the previous lending tactics helped lead to a record number of foreclosures not only in Colorado but across the United States (Colorado’s foreclosure filings reached a high of 46,394 in 2009).