QE and QM; Who cares?
While navigating the Richmond real estate market you will hear both of these terms on the radio, internet, and TV news. What do they mean and if you are looking to buy a home in Richmond VA this year, why should you care. Well, in brief…
QE means quantitative easing. Since the crash in 2008 the government has spent a lot of money in several different waves of spending to boost the economy. One of the ways they boosted the economy was to buy mortgage securities which drove down rates and helped housing. QE means that the government is letting off of the gas and cutting it’s spending program. This will cause mortgage rates to increase. Quantitative Easing is currently underway and spending on mortgage securities will gradually taper this year.
Why does this matter? Mortgage rates will slowly increase during 2014. With this information it is easy to see why now is the time to buy homes in Richmond Virginia versus waiting until later in the year.
QM or qualified mortgage is a Federal Law where the government is attempting to limit risky mortgages by putting new rules in place. QM will have a minimal impact on mortgage guidelines since most of the rules it imposed were already being carried out by the mortgage industry. However QM will limit some interest only or more unusual loans and will continue to tighten underwriting guidelines.
Why does this matter? Mortgages and client documents in 2014 will be scrutinized even closer than they were in the past. In general these are minor changes but will cause mortgage underwriting to be more restrictive.
In conclusion if you are in the market for housing in Richmond Virginia expect payments to be higher in 2014 due to appreciation and higher rates and expect for mortgages to continue to be more challenging in terms of paperwork and underwriting scrutiny.
If your 2014 includes taking the plunge into home ownership contact us today and see how we can help. The Richmond real estate experts at The 20/20 Team and the Richmond Mortgage Professionals at The Cowart Mortgage Team have a successful track record when it comes to Richmond real estate. Let this winning combination help put you in you next home!