Home Loans – It’s not your father’s mortgage

New federal regulations require mortgage lenders to verify that prospective borrowers can meet the repayment terms of their mortgage loans.

• Under the Dodd-Frank Act, the rules prohibit the “no-doc” loans commons during the housing bubble. Before making a loan, lenders must document the borrower’s job status, income and assets, debt, and credit history.

• Lenders must calculate a borrower’s ability to pay the principal and interest over the length of the loan, and they may not base their calculation solely on the payment due when an introductory “teaser rate” is in effect.