It is easier to get approved for a mortgage these days … really! Both Fannie Mae and Freddie Mac made substantial changes that will help qualify more buyers – do I dare say that many of the changes introduced some common sense back in the underwriting?? Some highlights … You can Pay Off Credit Cards to Qualify One significant change involves credit card debt – accounts that are paid down at closing to help qualify no longer need to be closed. That means a credit card that has been paid in full no longer counts against the applicants qualifying debt to income ratio. That can make it easier to qualify. Quite often we have clients that were frustrated because there credit report indicated minimum payment on credit card balances that previously had to be considered in their debt to income calculations. Even if the client could demonstrate that they always paid off the credit card monthly and did not carry a balance it got in the way of qualifying. A credit card paid in full no longer counts as debt. Loan to value increases for High Balance Areas More good news for conforming loans in high cost areas! Fannie Mae guidelines for loan to value are now the same for high balance areas as they have been for standard loan to value maximum. Clients wanting to finance a purchase or refinance a loan can now go up to 95% loan to value with mortgage insurance for a $625,500 loan on a single-family property in high cost areas such as the San Francisco Bay Area. Previously the limit was more restrictive with loans exceeding $417,000. Non-occupant co-borrowers are now allowed by Fannie Mae Helping a family member by a home particularly in California can be done utilizing a non-occupant co-borrower, typically a parent. That option is now opened up for conforming loans and there is no restriction on the occupying clients’ debt to income ratios. This will open up opportunities for families wanting to help get their kids into a home. I already have two instances where these new guidelines were the difference between getting a loan and not. Contact me if there are not any deals that were “on the edge” and we will work like crazy to see if the new guidelines can put that client in the position they could get financing for their dream home! Clay Selland NMLS #183492 CalBRE #01398801 925-807-1500 x303 (fax 925-807-1505) firstname.lastname@example.org
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