Fannie is in the news a lot these days! Thankfully it is all good news. Fannie has revised its lending guidelines, effective Dec. 13. The change will allow buyers to use gifts and grants from non-profit organizations to meet their minimum five percent down payment. Previously that money had to come from the buyers' own funds. Confused about which non-profit groups are handing out money? They are more commonly known as mom and dad.
Here is the small print: the loan balance must not exceed $729,000 in high-cost areas like NYC. But here in affordable Orlando, (relatively speaking, of course), our limit is $417,000. The debt-to-income ratio is dropping from 55% to 45%. If you have a spotty history on debt repayment, expect five percent of the total loan balance to be added to your debt-to-income ratio. And if you have had a foreclosure within the last seven years, don't bother applying after Dec. 13. The old rules only looked at foreclosures within the last four years.
What does this all mean? Loans are easier to get for people just starting out, but the loan balances will be more in proportion with what people can actually afford. Too bad they didn't think of this years ago.
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