As the housing market changes, so do the underwriting guidelines for mortgage products. In current years, we have seen more regulation than ever before. However, the fact of the matter is that housing will always be readily obtainable, but just in a safer, more responsible way. Below is a list of new Fannie Mae underwriting guidelines as well as a list of possible solutions that can help you get your mortgage approved!
Fannie Mae’s underwriting system is currently implementing certain policy changes that will be made to comply with the ability to repay qualified mortgages, or better known as QRM. Some of these policy changes include raising the standard qualifying criteria and doing away with certain assistance programs and loan products. For example, Fannie Mae just announced that as of November 16th, 2013, it will increase the minimum down payment from 3% to 5% of the total loan amount on a fixed conventional product. Another policy change will be the elimination of the Interest-Only (IO) loan as well as its 40-year term loan, both of which were very popular during the real estate boom. The upside to this is hardly anyone is attracted to these types of loans anymore.
So what does all this mean?
Well, these new regulatory measures may, to an extent, negatively affect the loan approval ability of lower income and credit borrowers on conventional loans. On the other hand, there are still a number of alternatives to Fannie Mae conventional loans that are appealing to lower income/credit borrowers such as FHA, VA and various state and local loan assistance programs. FHA still allows the minimum 3.5% down payment and VA still allows the no money down option for qualified veterans. There are an increasing number of state and local programs that offer grants for closing cost assistance in order to make the closing process more affordable. Although you may not think you qualify for a mortgage, I urge you consult with a real estate professional so we can explore your options together!
If you have any interest in hearing more about these policy changes or buying a home, please feel free to contact me and I will be glad to assist you. There are still many housing opportunities out there and it is still a great time to buy!!
NMLS #: 476394 | Caliber Home Loans
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