Tighten Up - The Black Keys
Since the beginning of the "Great Recession" the average mortgage consumer has been penalized. We were punished for the "sins of the few".
We cannot blame the many for the sins of the few
- Elena Hope Camp
or can we?
Some brief points of some new mortgage financing guidelines coming soon on real estate purchases. . .
Â Loosening of Credit
Â 1.Â Buyers can now have all gift funds as a down-payment on conventional loans, even at 5% down. This should help some highly qualified first time buyers get a much better loan than FHA. Much lower house payments. Effective immediately.
Â 2.Â Past Short Sales. These have been hard to close at times due to inconsistent credit reporting. FNMA (Fannie Mae) is adjusting their automated approval system to allow for many more of these buyers to be able to be approved sooner. Effective 11/16/2013.
Â 3.Â FHA (government insured financing) is expanding their waivers for "no waiting period" after a short sale/foreclosure/bankruptcy. The main point will be a 20% income loss beyond the buyer's control. This is not available with most lenders yet but should become standard once the secondary market investors catch up with guidelines for it. There has always been the ability to waive the waiting periods for buyers when adverse situations beyond their control have occurred but, the underwriting criteria is intense to get a waiver. So2 just like before this new expansion, this new waiver is no panacea that will help multitudes of buyers.
Â Tightening of Credit
Â 1.Â USDA is implementing their new areas based on the 2010 census effective 10/01/2013. Many close in areas that have been eligible for USDA financing will no longer be available.
Â 2.Â Conventional Loans will start requiring two months asset (checking/savings) statements, instead of one up to now, starting 11/16/2013. This may be thought of as not too important by some, but this is a big deal. These days lenders spend much of their time working through buyer's asset statements with them in order to be able to document funds to close. Unsourced deposits are common, first timers are scrimping to make it, and even highly qualified buyers seem to move money around between accounts a lot. All of this has to be documented, explained, and tracked in order to use as funds to close. With needing two months worth, it will be harder for some to get the necessary documentation prior to close of escrow. Delays will come for some buyers as underwriters insist on verifications. It will be important to start early with trying to keep some stability in bank accounts.