Mortgage Rule Changes In 2014 Qualified Mortgages

Dated: 04/24/2014

Views: 6840

Here are the features of Qualified Mortgages (QM):

•    QMs cannot have any of the following loan features:
o    An “interest only” period, when a consumer pays only the interest without paying down the principal.
o    “Negative amortization,” when the loan principal increases over time, even though the borrower is making payments.
o    “Balloon payments,” which are larger-than-usual payments at the end of the loan term.  However, balloon payments are allowed under certain circumstances (see below).
o    Loan terms that are longer than 30 years.
•    QMs will generally require that the borrower’s monthly debt, including the mortgage, is not more than 43 percent of the borrower’s monthly pre-tax income.  Temporarily, QMs can also be loans that can be bought by Fannie Mae or Freddie Mac or insured by certain government agencies, such as Federal Housing Administration (FHA).
•    QMs have limits on the amount of upfront points and fees that the consumer can be charged. These limits will depend upon the size of the loan. Many of the third-party charges, such as the cost of credit reports, are not included in this limit. 
•    QMs also have limits on discount points, which a consumer pays in return for a reduced interest rate.
•    QMs can have a balloon payment if they are made by a small lender operating in a rural or underserved area, under certain circumstances.
I hope this helps to explain some of these changes.  All of these rules and regulations can be rather confusing, especially with all of the new changes happening this year.  My advice is to find a great REALTOR that has a network of experienced lenders that can help you navigate this wild and changing world of mortgage finance.
Blog author image

Sam Lepore

Sam Lepore is a Realtor with Keller Williams in Moorestown, NJ. Call him today at 856.297.6827 ....

Latest Blog Posts

6 Secrets To Help Sell Your Home Faster

Looking to get out of your current home? Maybe you need to make a move soon, or need some more space ASAP. Whatever your reason for selling your home, getting it done fast takes some strategy.

Read More


As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing

Read More


Happy New Year!I’m so excited. I just got my very own handy, dandy KW App! Now you can download my app to your phone and have me and all the residential and commercial listings you could ever want

Read More

Loans To Own Your Own Home

Owning a home is a big part of the American dream. I hear people say all the time that they either don't have or still need to save the 20% required for a down payment. Did you know there are

Read More