November 28, 2013
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires lenders to make a reasonable, good faith determination that a consumer has the ability to repay a mortgage loan before extending the consumer credit also known as The Ability-to-Repay Rule.
Qualified Mortgage is a residential mortgage loan that which the regular periodic payments for the loan does not increase the principal balance or allow the consumer to defer repayment of principal and has points and fees less than 3% of the loan amount.
Debt to income ratios are the calculations underwriters use to determine whether a borrower can qualify for a mortgage. They are used to determine if you have the capacity to repay your mortgage.
There are two calculations:
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