New Mortgage Regulations May Make Homeowners Unable to Afford Their Current Home

The United Kingdom has implemented new rules to home financing that has many homeowners in a stir and mortgage regulators in the United States watching closely.

Traditionally, those seeking a mortgage to purchase or refinance a property are qualified for the loan partly based on the financial liabilities of the applicant. Those liabilities were determined solely by the debts evidenced on one’s credit profile. However, under the new qualification system the mortgage applicant’s liabilities are still calculated based on credit profile’s liabilities but the applicants living expenses are also taken into account. These living expenses include utilities payments, retirement account contributions and insurance costs. Although these new qualification requirements will display a better picture of affordability of potential home buyers, current homeowners will be met with the challenge of possibly not qualifying for the home that they currently own and will not be able to refinance. The US housing market has considered these more financially responsible guidelines but have always been met with opposition from the banking and real estate industries because of the years of market corrections needed to implement the changes as well as possible political fallout from the millions of homeowners that would no longer be able to qualify for a home purchase.

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