Right now is the perfect time to buy a home! With credit and underwriting requirements relaxing, real estate rebounding, rates low, new mortgage loan programs and Spring in the air, the real estate industry is doing amazing right now! Why wouldn’t you want to DROP your rent payment for a lower mortgage payment or DROP your current mortgage rate for something lower! Drop Mortgage is here to advise you why right now is the perfect time to own a home after a foreclosure or short sale.
Looser Mortgage Credit
After years of hyper-cautious lending, more mortgage lenders are starting to relax credit and underwriting requirements, which are also known as “overlays.” A big push in that direction came a few months ago when new guidelines from Fannie Mae and Freddie Mac took effect. These government-sponsored mortgage giants purchase about two-thirds of all new home loans. The new policies were aimed at clearing up confusion about when lenders must buy back loans that go sour. Economists and industry insiders expect the new found clarity will lead to broader access to mortgage credit. The Urban Institute estimates more “normal” lending requirements could mean an additional 1.2 million home loans every year. This can also benefit tons of people suffering to own a home after a foreclosure or shortsale!
Lower Down Payments
Prospective buyers have another reason to high-five Fannie and Freddie: They’ve recently agreed to get behind loans with just 3% down. That lower benchmark, coupled with loosening credit standards, will likely help more first-time buyers enter the market. Buyers will need at least a 620 FICO score and be on the hook for private mortgage insurance. Requirements for the 3% option vary between the two agencies. Depending on their path, buyers may need to complete a home buying education program or show they haven’t recently owned a home.
Cooling Home Prices
Some housing markets are still hotter than others. But the overall pace of housing price growth has slowed considerably. Freddie Mac’s housing price index soared 10% from September 2012 through September 2013. Over the last year, the index is up just 5%, and Freddie Mac economists expect only a 3% increase for 2015. Increases in housing inventory may also help to push down prices in some places.
New Loan Programs!
3% DOWN: A NEW MORTGAGE PROGRAM FOR 2015
There’s a new low-down payment mortgage option available to today’s home buyers; and a lower-equity refinance available to refinancing households. The program, which is available via Fannie Mae today, is not formally named. It’s an extension of the existing MyCommunityMortgage (MCM) program; and, in official Fannie Mae documents, is referred to as the “expanded LTV” program. The 97% loan-to-value program is meant to help home buyers who might other qualify for a loan but lack the resources to make a five percent down payment or more. It’s also geared at homeowners whose homes have lost value since purchase but who are otherwise ineligible for the Home Affordable Refinance Program (HARP) because their loan start date is after May 31, 2009; or for some other reason. The 97% LTV program launched in December 2014. The program has no set end date.
THE 97% LTV MORTGAGE
Mortgage lenders are making it easier get approved for a mortgage. Fannie Mae and Freddie Mac have announced a new low-downpayment mortgage program which requires just 3% down at closing, joining other government agencies in offering loans which require little or no money down. The 97% mortgage program marks Fannie Mae and Freddie Mac’s second foray into low-downpayment lending. The original program was discontinued in late-2013 despite popularity among first-time and repeat buyers. The new, retooled 97% LTV program is more forgiving toward first-time buyers than was the Conventional 97; and the new program can be used for home refinances, as well, with few restrictions. In offering a 3 percent down-payment program, Fannie Mae and Freddie Mac bring yet another financing option to today’s home buyers wanting to minimize their down payment.Tweet