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Stretching to buy - a fact of life in Greater Boston - may soon become a lot harder

Posted by Scott Van Voorhis April 8, 2011 06:04 AM

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The return of the 20 percent down payment was the first shoe to drop amid the mortgage market overhaul taking place in Washington.

But the real game changer for Greater Boston, with its perpetually inflated home prices, can be found in some of the less examined pieces of this monster federal proposal.

Some of the new rules, notes Kenneth Harney, would bar home buyers from tapping the best mortgage rates if they exceed strict debt-to-income ratios.

Basically,no more than 28 percent of your monthly, pre-tax earnings can go towards housing, while total housing debt can't be more than 36 percent of what you make, he notes.

Darn, I guess that means no more million-dollar fixer-uppers.

OK, kidding aside, Freddie Mac will let you spend more than 45 percent of your income on housing.

And better keep up not just with your mortgage - obviously - but with all your credit cards as well. Sixty days late on any "credit account" and you too will be barred from getting a decent mortgage rate.

It's hard to argue our messed up housing market doesn't need some stern medicine. But does this go too far?

What's your take?

This blog is not written or edited by or the Boston Globe.
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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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