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New Mortgage Rules

July 16, 2014, 10:10 PM by Angela Kennecke

New Mortgage Rules

A few years ago nearly anyone could get a mortgage--and we all experienced the pain when the housing bubble burst. This year, new mortgage rules went into effect to protect homeowners who are struggling. Potential buyers are also required to get education before entering into a loan for some mortgages.

The housing market is picking up steam in Sioux Falls this summer with more people confident in the economy and low interest rates. New mortgage rules are in place to help borrowers avoid getting in over their heads. 

"(It gives them) Accessibility to education and accessibility to education and options they have as a part of the loan program that they're in," Breck Miller of the Center for Financial Resources said.

The Center for Financial Resources has doubled the number of its homebuyer classes and now also offers pre-purchase appointments. 

"We do an inquiry into a client's credit report--walk through it and educate them on what goes into that--what it says about them and the impact it has on their lending," Miller said.

24-year-old Ryan Goertzen is currently a renter, but hopes to have his own farm someday.  He took the Homebuyer Express class.

"I realized I had no real idea of what I was doing in looking at rates of mortgages, and how to get loans and all of these things.  And the class was free and I thought that was a great opportunity to check it out and see what I could learn," Goertzen said.

What he learned was that he just wasn't ready to take the plunge into home ownership yet.

“It was very valuable to me to have the information and the class, but it actually kind of dissuaded me; to slow down and look at things more practically and wait for a little while because I am pretty young," Goertzen said.

While only some loans, like FHA, require homebuyer education, pre-purchase financial counseling cuts down on first time homebuyers of being delinquent on their loans by nearly 30 percent.  People who get financial counseling also have an average lower monthly payment.

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