This blog is supposed to be about luxury, but lately I’ve been wondering about other things: Like, will health insurance costs become a consideration in qualifying for a mortgage or refinance?
Currently, health care costs are not a real consideration when lenders are considering one’s ability to pay for a mortgage.
Was this another unintended consequence of Obamacare and the Affordable Healthcare Act? We have several clients whose health care costs have gone from $300-$400 per month to well over $1000–and even far more.
Health insurance costs are not a qualifying factor when qualifying a buyer for a mortgage–even when health care coverage may exceed current rent and mortgage levels. Credit card bills, however, can make or break a mortgage deal–even if payments are half or less of one’s rent or current mortgage payment.
Just a consideration, but if a mortgage or refinance is in the works this year, you might consider pulling the trigger and get a mortgage with a rate we might not see again in this lifetime. And this might especially be true if you have experienced a sharp spike in your health insurance costs. We are advising clients to buy or refinance before mortgage companies realize that these premiums are likely to be fixed costs, just as pressing as any credit card payments.
I was googling all morning with the query “Obamacare and mortgages” because I strongly believe Obamacare will destroy the real estate sales and lending markets. With the requirement to have health insurance now mandated by the Federal government – I too believe that lenders will have to factor in the cost to the newly raised ratios. People will have to prove they have health coverage and document the monthly costs and high deductibles. Combine that with the fact that most the “exchange” plans are local in nature, many prospective purchasers who are considering relocation or a second home will have to base their moving decisions on whether they can afford (or even get) insurance in a different state or even county.
I don’t like being a dooms day predictor – but all of the signals point to a severely distressed lending and real estate sales environment in the upcoming years.