Just got some really important information on upcoming changes in mortgage underwriting standards from one of my “go to” mortgage people, Justin Messing of Jersey Mortgage. Effective January 10th, 2014 debt-to-income ratios will change on all Conventional Loans to a maximum of 43%. This means an individual’s total debt (including mortgage, taxes, insurance, car payment, credit card minimum payments , etc…) cannot exceed 43% of their gross monthly income. For example, an individual who earns $100,000/year ($8333/mo) cannot exceed total debt higher than $3583/mo. Currently, the maximum debt-to-income ratio is 45% (and in some cases even higher). Going from 45% to 43% represents a 2% change. Using the above scenario as an example – it would represent a decrease of $166/mo., which would translate into a loss of around $33,000 in loan qualifying power!!! This is based on an interest rate of 4.5% on a 30yr fixed loan. On top of this interest rates are supposed to rise to over 5% next year. Please let me know if you have any questions on this topic or buying/selling a home in the Maplewood, NJ area.
Allison Ziefert, top Maplewood Realtor at Keller Williams Mid-Town Direct Realty, Maplewood, NJ
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