The Federal Housing Finance Agency recently announced that it is raising the conforming loan limits for Fannie Mae and Freddie Mac to more than $510,000.
In most of the U.S., the 2020 maximum conforming loan limit will be raised to $510,400, up from 2019’s level to $484,350.
This marks the fourth straight year that the FHFA has increased the conforming loan limits after not increasing them for an entire decade from 2006 to 2016.
Read more details on HousingWire…
Long-awaited updates to Federal Housing Administration condo rules will take effect October 15, 2019 under revised guidelines issued last month. Housing officials praised the change, saying the FHA loan program will now be more “flexible and responsive to market conditions.”
FHA said it is bringing back spot approvals and taking other steps to loosen requirements for FHA-insured condominium financing. The move is expected to allow more buyers to obtain low downpayment mortgages on affordable housing options.
An estimated 20,000 to 60,000 more condo units per year are expected to qualify for financing, according to the FHA. That represents a substantial increase from current provisions, with only 6.5% of the more than 150,000 condo projects approved for FHA financing.
Once implemented, the guidelines will mean an individual condo unit in a building of 10 units or more may be eligible for spot approval if no more than 10% of the units are FHA-insured. In smaller buildings, with fewer than 10 units, no more than two units can be FHA-insured.
The new rules will also:
NAR President John Smaby applauded the ruling, saying it culminates years of collaboration between NAR and the Department of Housing and Urban Development (HUD). He expects the ruling will help reverse recent declines in condo sales.
“Condominiums are often the most affordable option for first-time home buyers, small families, and those in urban areas,” Smaby noted.
FHA Commissioner Brian Montgomery said the agency has been working alongside stakeholders for three years to update its condo policies. NAR has sought rules changes since 2008, specifically to allow the owner-occupancy level to be determined on a case-by-case basis, and to extend the approval period for project certification to five years.
“It had become clear for many years that we needed to update our condo project approval regulations so that, while not exposing the agency to more risk, they are more flexible and less prescriptive and more reflective of the current market than the previous condominium project approval provisions,” Montgomery said on a call with reporters and the HUD secretary.
“This new rule allows FHA to meet its core mission to support eligible borrowers who are ready for homeownership and are most likely to enter the market with the purchase of a condominium,” added Montgomery, who is also HUD Acting Deputy Secretary.
In a press release announcing the updates, HUD stated, “In an effort to promote affordable and sustainable homeownership, especially among credit-worthy first-time buyers, the Federal Housing Administration (FHA) today published a long-awaited final regulation, and policy implementation guidance, which establish a new condominium approval process.”
Source: NW REporter 9/9/19
Anyone who has saved for a down payment for a home knows it’s tough — especially for first-time homebuyers. In 2018, the National Association of Realtors (NAR) found that 13 percent of first-time homebuyers said the most difficult step in the homebuying process was saving for a down payment.
It’s a misconception that a 20-percent down payment is required for a home purchase, when in reality, many home loan options exist that may be able to put consumers into a home for as little as three percent down. In fact, 77 percent of non-cash first-time homebuyers in 2018 purchased a property using a down payment of less than 20 percent. Buying a home may be within reach — RE/MAX and Motto Mortgage put together a list of the most popular loan options for first-time buyers.
While there have been signs recently that the market may be shifting toward the favor of home buyers, prices are still on the rise in many areas around the country. The median sales price in July was $230,411, up 5.8 percent year over year.
But if buyers are hoping to wait it out, remember that mortgage rates are also increasing. The typical mortgage payment jumped 13.1 percent over that same one-year period, due to a nearly 0.6 percentage point increase in mortgage rates, according to new data from CoreLogic, a real estate research firm.
Mortgage rates are expected to keep rising, too. CoreLogic researchers predict a nearly 10 percent increase in buyers’ mortgage payments by next July, twice the rate expected for home prices. Rates are expected to increase by about 0.43 percentage points between July 2018 and July 2019. Housing forecasters predict median home sale prices to continue to rise by 1.8 percent in real terms over that same period.
Based on these projections, CoreLogic researchers predict the inflation-adjusted typical monthly mortgage payment to rise from $937 in July 2018 to $1,003 by July 2019. Furthermore, real disposable income is expected to increase by only around 2.5 percent over the next year. That means “home buyers would see a larger chunk of their incomes devoted to mortgage payments,” CoreLogic researchers note.
To calculate the typical mortgage payment, CoreLogic researchers use Freddie Mac’s average rate on a 30-year fixed-rate mortgage with a 20 percent down payment (not factoring in taxes or insurance). The typical mortgage payment standard is used to help judge affordability since it shows the monthly amount a borrower would have to qualify for to get a mortgage to purchase a median-priced U.S. home.
Nevertheless, while mortgage payments are on the rise, they’re still low by historical standards, CoreLogic researchers note. In July 2018, the typical inflation-adjusted mortgage payment still remained 26.8 percent below the all-time peak of $1,280 in July 2006. The average mortgage rate in June 2006 was 6.7 percent compared to 4.5 percent in July 2018.
Source: REALTOR® Magazine
You’ve researched the neighborhood and spent hours scouring listings online. You know the best zip codes and school zones and are ready for the next step in the home buying process – getting pre-approval from your mortgage lender.
There is a lot that goes into determining if you qualify for a loan, but most traditional lenders will consider these five categories:
Your credit score will tell lenders about your character and your credit history. Do you pay your bills on time? Are your accounts in good standing? If your credit score is poor, you should focus on improving it before applying for a home loan.
This category measures your ability to pay back your loan. Your income, and your job stability, will come into play here, as well your debt-to-income (DTI) ratio. Your DTI is calculated by dividing total recurring monthly debt by gross monthly income. A ratio over 36 percent could mean you’ll pay more interest or that you will be denied a loan. If your DTI is over 36 percent, you should focus on lowering it by paying down your current debt, not taking on more debt and avoiding big purchases, such as a car, on credit before you buy a home.
Capital refers to the money you have, or will have, to purchase your new home. Buyers with a down payment will have a better chance of obtaining a loan but a down payment is not a necessity. There are various loan programs that do not require a down payment.
In the case of home loans, collateral is the home itself. If you default on the mortgage, the bank will seize the home – this is why a home appraisal is almost always required before obtaining a loan.
Is it a buyer’s or seller’s market in your area? What is the current interest rate? These are conditions that can impact home prices in your area as well as your ability to get into a home.
Getting pre-approval for a home loan can be intimidating, but it doesn’t have to be. Contact me, and I’ll be happy to help guide you and those you know through the process!
Consumers who make efforts to raise their credit scores from “fair” to “very good” may see big payoffs. LendingTree researchers analyzed loan request and average loan balance data to see how a lower credit score can increase borrowing costs for the average consumer. They compared the impact across several types of debt: mortgages, student loans, auto loans, personal loans, and credit cards.
Overall, raising a credit score from “fair” (580-669) to “very good” (740-799) can save a consumer $45,283 on their debt. That’s the average in extra interest on all debt that consumers will pay when they have a credit score ranked as fair. Mortgage costs can account for 63 percent of those potential savings. By raising a credit score from fair to very good, consumers could save $29,106 in mortgage costs, the study shows.
Getting a mortgage is, by general consensus, the most treacherous part of buying a home. In a recent survey, 42% of home buyers said they found the mortgage experience “stressful,” and 32% found it “complicated.” Even lenders agree that it’s often a struggle.
“A lot can go wrong,” says Staci Titsworth, regional manager at PNC Mortgage in Pittsburgh.
If you’re out to buy a home, you have to be vigilant. To clue you into the pitfalls, here are six of the most common ways people mess up getting a mortgage.
Buying a home—especially if it’s your first—can be a lot like losing weight in the sense that people end up doing, well, some pretty dumb stuff in the process. But while desperate dieters might waste money on “magical” weight-loss pills or silly exercise equipment, misguided home buyers could be doing far more serious damage—like undermining their ability to purchase a house at all. Don’t be one of them! Realtor.com asked real estate agents to shed light on some of the dumbest reasons people can’t buy a home. The good news? These flubs are easily avoidable. Read on and beware…
Government-sponsored financing giant Fannie Mae will ease its requirements this month, raising its debt-to-income ceiling from 45 percent to 50 percent on July 29. The move could pave the way for a larger number of new buyers to qualify for a mortgage, particularly millennials who may be saddled with student loan debt.
The debt-to-income ratio compares a person’s gross monthly income with his or her monthly payment on all debt accounts, including auto loans, credit cards, and student loans. It also factors in the projected payments on the new mortgage. Lenders see applicants with lower debt-to-income ratios as less at risk of defaulting.
Fannie Mae, Freddie Mac, and the Federal Housing Administration have exemptions that allow them to buy or insure loans with higher ratios than the federal rules, which are set at a maximum of 43 percent. The FHA allows debt-to-income ratios of more than 50 percent in some cases.
In a recent study, Fannie Mae researchers looked at more than a decade and a half of data from borrowers with debt-to-income ratios in the 45 percent to 50 percent range. They found that a significant number of these borrowers had good credit and were not prone to default.
Lower costs are coming for homebuyers seeking a Federal Housing Administration -insured mortgage.
FHA recently announced that they are cutting annual premiums for mortgage insurance from 0.85 percent to 0.60 percent, a move the National Association of Realtors® said breathes new life into the program.
“FHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders,” said NAR President William E. Brown, a Realtor® from Alamo, California and founder of Investment Properties. “The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time- and lower-income borrowers. Now, we have a real opportunity to get back on track.”
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