Ability to Repay Rule too strict for ordinary homebuyers

Critics say that the Ability to Repay Rule will make it even harder for people with bad credits to get house loans. Only those who have 43% of debt to income ratio will be qualified to apply for a mortgage. A higher priced loan will be given to the consumer who have bad credit but of whom the lender determine to have the ability to repay the loan.

The Ability to Repay Rule obliged lending companies and banks to ensure that the would-be borrowers will be able to afford the mortgage loans that they are applying for. With the Ability to Repay Rule, lending companies and banks are now required to verify some of the borrower’s important financial information such as if the borrower has any other debt obligations like bad credit loans.

Checking the borrower’s employment information and the ability to repay on low rates are also required.

For Whom is The Ability to Repay Rule

The Consumer Financial Protection Bureau was the one who unveiled this mortgage lending rule, “The Ability to Repay Rule.” It was said that this rule was designed for the benefit of the borrowers against unsafe banking practices which led to the housing bust in 2008.

The director of the Consumer Financial Protection Bureau mentioned that the fundamental of the Ability to Repay Rule is based on two elementary principles; one has something to do with checking on the figures, and two, make certain that these figures would be checking out.

Although the new rules seem to be as common as any other rules placed in the government books, one rule can have a big impact on the nation’s mortgage and housing markets. The Ability to Repay Rule which is authorized by the Congress is thought to clean up the messy mortgage industry, but some people say that the new rule is too strict.

Regardless of the concerns that a strict ruling could be a hindrance to the large number of would be homebuyers, for others the rule can still be considered fair and reasonable.

Experts also said that the new rule is good for the borrowers who have good credits, but to those who have bad credit scores, lenders could possibly be hesitant on giving them loans.

That’s why for people who have bad credit scores, a denied regular housing loan can lead to application for bad credit loans. Application online is available. If used wisely, bad credit loans can help you get your credit score up and/or get the home you’ve always wanted.