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Thursday, May 18, 2017

Do These New Financing Regulations Affect You?


There are some important underwriting regulations that have changed recently that we wanted to break down for you. Will you be affected for the better?

Some underwriting guidelines have changed recently and this time, it's actually a good thing. 

Normally a change means these guidelines have tightened up, but they've actually relaxed some guidelines, and Fannie Mae has released a bunch of improvements for the consumer. If you're an investor, have student loans, or own a condo, all of these are relevant to you.

If you've had trouble refinancing your condo and have been told the property is non-warrantable, they will no longer require a condo questionnaire if you want to refinance for a better rate. That's usually where problems arise—things like the condo complex being in litigation or the owner-occupant ratio percentage being off.


"Fannie Mae has finally relaxed some important regulations."


Fannie Mae also reduced the down payment for investment properties from 20% to 15%. Since Fannie Mae allows for up to 10 financed properties, this is true for all 10 if they are a single-family unit, condo, or townhome. It doesn't apply to two- to four-unit buildings.

Finally, there were changes when it comes to student loans. Student debt can be a thorn in your side if you're trying to secure financing because those payments typically need to be calculated into your debt-to-income ratio. Fannie Mae has made it so that the payment that shows up on you credit report is actually the payment used to qualify you. 

If you have income-based repayment, we can now use that amount to qualify you. Additionally, if you have loans you're looking to pay off, you can actually pull equity out of your home to pay them with what's called a 'rate and term' refinance instead of a cash out refinance. The difference is that a cash out refinance has a 0.25% higher interest rate.

If you have any questions about these changes, don't hesitate to give me a call or send me an email. I'm here to help!