Ability-to-Repay Rule Ensures You Can Afford Your Mortgage Payments
When you apply for a mortgage, it can sometimes be hard to understand how much of a monthly payment you can afford. Oftentimes you have to factor in additional fees and property taxes that add to the base cost of your monthly payment.
You can’t always rely on a mortgage broker or lender to ensure that you’re getting a responsbile loan that you can afford.
That’s why the Consumer Finance Protection Bureau (CFPB) introduced the Ability-to-Repay rule.
Under the new rule, lenders have to ensure that you can pay back the loan plus interest over the long term.
According to CFPB, in order to do that, lenders will need to verify the following before they can issue you a loan:
- Current income or assets;
- Current employment status;
- Credit history;
- The monthly payment for the mortgage;
- The monthly payments on any other loans associated with the property;
- The monthly payment for other mortgage related obligations (such as property taxes);
- Other debt obligations; and
- The monthly debt-to-income ratio or residual income the borrower would be taking on with the mortgage. (Debt-to-income ratio is a consumer’s total monthly debt divided by their total monthly gross income).
These rules will help protect you from lenders who might try to sell you an irresponsible mortgage that you can’t afford.
We welcome your comments if you are 13 or older, and hope that our conversations here will be polite. You are responsible for the content of your comments.
We do not discriminate against any views, but may delete any of the following:
- violent, obscene, profane, hateful, or racist comments
- comments that threaten or harm the reputation of any person or organization
- advertisements or solicitations of any kind
- comments that suggest or encourage illegal activity
- multiple off-topic posts or repetitive posts that are copied and pasted
- personal information including, but not limited to, e-mail addresses, telephone numbers, mailing addresses, or identification numbers
In short: be nice and add to the discussion. If you continually violate this policy, we may limit your ability to comment in the future. If you have any questions or comments about this policy, please e-mail us.
