What Does Ability To Repay Mean?

77557d9d365047843e2f3ac6aeb9c458e711c750.jpg?image_play_button_size=2x&image_crop_resized=960x540&image_play_button=1&image_play_button_color=7b796ae0

What Does Ability To Repay Mean? - Fort Lauderdale, FL | Marc Brown, P.A.

What are the “Ability to repay” rules about?

In a nutshell, as this video shows, new laws require lenders to make a good-faith assessment of a borrower’s capacity to pay back their loan over time.

It’s a longer-term view that goes beyond immediate income, debt and credit rating.

These new Federal laws- supervised by the CFPB – require lenders to ask more questions –

about income, assets, employment, credit history, and monthly expenses –

as they relate to the proposed loan.

For example, a lender offering a mortgage with a low initial rate must try to assess how a borrower will handle the later, higher rate as well.

If you’re applying to borrow ask whether the program you’re considering is a Qualified Mortgage

Ability-to-repay rules are built in to loans that meet Qualified Mortgage guidelines.