Lenders Loosen as Prices Rise

Lenders Loosen as Prices Rise

Source: The Los Angeles Times via CAR.org

As prices rise, mortgage lenders are making it easier to buy a house

Some prices are rising across the country and mortgage rates, though still historically low, are up since the presidential election.

Simply put, buying a home isn’t easy, especially in high-cost metropolitan areas such as Los Angeles County, where the median price of a home hit $569,000 in June.

But changes in the mortgage industry are afoot, with the goal of loosening some of the strict standards established after the subprime crisis — rules some blame for impeding sales.

“The reality has sunk in that there are buyers out there who will be able to buy homes and make the mortgage payments,” said William E. Brown, the president of the National Assn. of Realtors. The industry is “trying to give them more options to buy a house.”

Government-controlled mortgage giants Fannie Mae and Freddie Mac are paving the way by rolling out new programs to encourage home ownership.

The companies, with their congressional mandate to promote home ownership, don’t originate loans, but purchase mortgages from lenders to keep the market moving. And any changes they make in the underwriting standards for the loans they buy can have a big effect.

Click here to read the FULL STORY on The Los Angeles Times

 

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Fannie Mae to Loosen Mortgage Requirements

Fannie Mae to Loosen Mortgage Requirements

Good news for potential buyers! Some loans will soon allow for a little more wiggle room when it comes to qualifying ratios, allowing buyers to be more competitive in a bidding situation or qualify for a certain purchase price when they were previously not able to!

Need a referral to a trusted mortgage professional? Just email us at info@terrafirmaglobalpartners.com! Happy house shopping!

Source: California Association of REALTORS®

Fannie Mae will ease its loan qualification requirements, raising its debt-to-income ceiling from 45 percent to 50 percent on July 29. The move could make it easier for a larger number of new buyers to qualify for a mortgage, particularly millennials who may be burdened 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.

Not everyone with a debt-to-income ratio of below 50 percent will be approved. Borrowers will still be closely vetted by Fannie’s underwriting system to examine their complete application, including income, down payment, credit scores, and more.

 

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Source: Terra Firma