Happy New Home

Posted: 1/5/2015

 The housing market might be getting back on track, but the tight credit requirements are still keeping first time buyers away from the dream of purchasing their first home - or were... until now! According to specialists, recent important government policy changes combined with new low down payment programs will make 2015 the perfect time for new buyers to invest in a home.

Fannie Mae and Freddie Mac recently established new mortgage qualification guidelines in order to clarify qualification standards that resulted from the Dodd-Frank reforms in 2010, which were intended to prevent an increase in the financial crisis. The new guidelines went into effect on December 1st and should be a positive change in the current Real Estate scenario.

Up until now, the lack of certain specific rules and clear guidance on loan regulations would lead Fannie or Freddie to enforce more conservative lending practices and reject more loans. Such circumstances pushed banks to add strict requirements to the proposed guidelines. As a result, according to the mortgage software company Ellie Mae, the average declined credit score on conventional purchase mortgages in October was 723, when the minimum standard set by Fannie Mae and Freddie Mac was 620.

With the new standards, thousands of new buyers should be able to get a mortgage in faster approval process. In December, Fannie and Freddie announced the details of the low-payment mortgage programs that will be offered to enable qualified buyers to purchase a home with down payments of as little as 3%. Even though such programs only lower the down payment by 0.5% from similar loans available from the Federal Housing Association (FHA), they still offer certain advantages that make them more attractive, such as the borrower's ability to stop paying private mortgage insurance fees after the equity of the home reaches 20%.

The flexibility that comes with the changes in requirements for lenders should help first time buyers make their new home dreams come true in 2015. Specialists say we should be able to see the results soon, with a spring selling season expected to start earlier than normal.