Although Darian Jones of Long Beach is anxious to buy her first home, she's meeting with her mortgage lender, Michelle Scott of Luxury Property Lending, even before looking for a place to make sure she can afford the loan.
"I am trying to clean my credit up a little bit more and just get things paid down and get everything in order," said Darian.
Michelle says nailing down loan options now is good timing because beginning January 10 it will be more difficult for many consumers to qualify for a loan.
"What's going to be happening is that underwriters are going to be scrutinizing your income and your documentation for consistency for, say, a period of two years," said Michelle.
New federal mortgage rules go into effect in January. They were established by the Consumer Financial Protection Bureau, created by the Dodd-Frank Reform Act of 2010. The new rules are meant to prevent lending practices that led to the housing crash.
One rule makes debt-to-income ratios tighter.
"They're going to be 43 percent maximum across the board. So let's say your income is $5,000 a month: Your total monthly out-go is going to be limited to $2,150 -- $2,150, inclusive not only of your housing payments, but also your credit card payments," said Michelle.
Not only do you have to worry about the new mortgage rules, but also interest rates: There's a good possibility they could go up next year, affecting your mortgage payments dramatically.
"Economists are predicting that they're going to go up a full percent in the next year. And on a $400,000 loan, that equates to $300 a month, just a 1-percent increase in interest rate," said Michelle.
To offset these things, some first-time home-buyers may be able to qualify for a federal tax credit and other government down-payment assistance.
"There's a grant that's available, and then there's this mortgage credit that's available that can help save me a little extra money a month," said Darian.
"The grant that we're able to get for Darian is going to be forgiven in three years completely, and she's not going to have to repay it," said Michelle.
Also, Freddie Mac and Fannie Mae announced consumers will need to have a higher credit score to get their lowest interest rate on mortgages.