In an effort to keep Hampton Roads Realtors®, agents, brokers and lenders up to date on title and closing issues, Reliant Title is now publishing a bi-weekly email we thought you might be interested in.
New Credit Card Rates Will Affect Home Purchasing Power: Credit card companies are doubling minimum monthly payments from 2% to 4%. Homebuyers with credit card debt will be impacted.
Consider that the average American's credit card balance is nearly $10,000. Under the old minimums, this equated to a monthly payment of $200. That minimum payment will now be $400 per month. Mortgage lenders calculate debt-to-income ratios in order to qualify homebuyers for loans. Installment debt (credit cards, car loans, etc.) are added to the estimated mortgage payment to calculate total debt obligations. Dividing this by the gross monthly income yields the debt-to-income ratio as a percent (40% to 45% depending on the Credit Score). To qualify for a given loan, the homebuyer's debt-to-income ratio is one factor that determines final loan approval.
As more credit card companies increase their minimum monthly payment, buying power will decrease. A $10,000 credit card balance reduces the amount of loan (@6%) the potential buyers can qualify for by ~$35,000. Be aware of this when "qualifying" new homebuyers, and determining what homes to show them.
Survey Seminar: On Tuesday, more than 70 Realtors®, brokers and lenders attended the Reliant Title seminar on the new survey requirements taking effect January 1. If you were unable to attend and would like the information packet, please pick one up at our office located on the first floor of the Hampton Roads Realtor® Association building on Business Park Drive.
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