What do new mortgage rules mean?

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JACKSONVILLE, Fla. - Now that there are new rules in place governing the types of loans banks can make to home buyers, what do they mean for you if you're shopping for a new house?

It might mean a tougher time getting a loan, experts say.

The rules are supposed to protect borrowers from many of the exotic loans that were rampant before the housing crisis.

For example, there will be no more interest-only mortgages; no more loans where the principal increases over time, carries a balloon payment or has terms of more than 30 years; and if a borrower's total debt exceeds 43 percent of his or her income, they won't be able to get the mortgage.

The debt banks will be looking at includes student loans, auto loans, credit cards, alimony and child support payments.

Local real estate broker David Elian says the new rules hopefully will avert another economic meltdown.

"If a borrower doesn't have money for a down payment or wants to do one of these exotic loans, many times they're not ready realistically to be able to buy a home yet, it'd be better to see them save up enough money to be able to have the down payment and the closing costs," said Elian, of Keller Williams Realty.

Elian says if you want to buy a home, make sure you have good credit, and that means 12 months or more of never making a late payment.

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