Hello neighbors,

It seems that financial reform may have an impact on both home buyers and owners alike in the future. With the recent passing of the massive reform law, take a look at two main components that have potential to make a major impact.

Harder to Qualify for a Mortgage:

The new law governs certain guidelines that lenders must follow when making loans. Now that these guidelines are actually written into law, lenders may find it even more difficult to loosen them once the economy and housing market gets back on track. Under the new law, lenders are required to document the borrower's income. However, this new law does not specify the terms under which the loan can be made. With that being said, lenders may be persuaded to tighten their guidelines to stay within the safe zone of the new law.

Higher Mortgage Rates:

There are a couple of sections within the new law that will increase future mortgage rates. The new law will require lenders to maintain a 5% stake in loans they originate unless those loans meet a particular criteria. With that being said, lenders will not be able to remove some of the higher risk affiliated with these loans. In addition, this will cause the interest rates on these types of loans to increase.

Despite these factors, there are positive attributes to the bill such as consumer protections relating to pre-payment penalties. In addition, with mortgage rates being at record lows, buyers should take advantage now and get qualified for a mortgage opposed to waiting and being affected by the above mentioned components of the new law in the future.