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Clarity Financial Planning Services is an advocate for your financial future who takes a holistic approach to your needs and goals.

Financial Planning Can Help You Secure a Home Loan

Sold Home For Sale Sign in Front of New HouseMany people who are gainfully employed don’t see the need for financial planning because they feel as if they are doing okay. Some of these people who have decent jobs, contribute to retirement plans, and in general, live comfortably may be surprised in the coming year when they apply for home loans and don’t get the results they were expecting.

Yahoo! listed, “Eight reasons why it will be harder to get a mortgage in 2014” to let people know that lenders are looking beyond credit scores as they review loan applications. The Dodd-Frank Act requires more of lenders in an effort to prevent the predatory lending practices that led to financial crisis a few years ago. To put it simply, you need a good debt-to-income ratio and need to have enough money to cover the expenses of homeownership, but it helps to be aware of some of the specifics:

Additional fees: It isn’t enough to be able to cover a mortgage; you have to demonstrate that you can pay related fees including property taxes, homeowner’s insurance and condo or homeowner’s association fees.

Other mortgages: According to Yahoo! “Believe it or not, some lenders previously weren’t including the payment on [a] second mortgage in their calculations…” Now you will need to disclose information about other mortgages, as well as the expenses related to other properties you may own.

Personal financial obligations: While the FHA looked at alimony and child support payments, this was not a universal consideration for all lenders; now other lenders will need this information when they examine your eligibility for a home loan.

Working with a knowledgeable Fee-Only financial planner who has studied the implications of Dodd-Frank Act may not guarantee that you get a loan from a certain institution but it can help you to have a better grasp of your financial outlook before you apply for a loan.