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Mortgage Update – What is actually going on?

Fannie Mae, one of the institutions that buys a majority of the mortgages in America, just released updated guidelines easing down payment requirements & increasing the availability of cash-out refinances on HIGH-balance loans. 

As a reminder, in LA County, High Balance Loans allow our clients to borrower up to $625,500 on a single family, up to $800,775 on a duplex, up to $967,950 on a triplex and up to $1,202,025 on a four-plex before having to deal with the complications and increased scrutiny that accompanies a jumbo loan. 

  • 5% Down on Owner-Occupied Single-Family Residences –  All of the old guidelines used to require a minimum of 10% down on ALL loans over $417,000.  Now we can go up to a loan amount of $625,500 with only 5% down.  ***This mortgage does come with private mortgage insurance; however, it’s still a better option than an FHA loan which comes with costly government mortgage insurance.  

  • 15% Down on Owner-Occupied Duplexes –  Prior to the release of these updated guidelines, the ONLY option for low money down on a duplex was an FHA loan.  Now borrowers have a 2nd option to buy a duplex with 15% down on loan amounts up to $800,775.  Again, there is mortgage insurance, but saving 10% down on a loan amount this size can be a deal maker instead of a deal breaker.   I love income property!

  • Buy a 2nd Home with 10% Down –  Prior to these updated guidelines, it was VERY difficult to buy a 2nd home or vacation property with less than 35% down if the loan amount was going to be over $417,000.  Now, for loan amounts between $417K and $625,500 – borrowers can get the 2nd home of their dreams for only 10% down. Good news!

  • Lower Money Down on Investment Properties-  Across the board, the down payment requirements on investment properties (all kinds) have dropped by 5% – 10%. 

  • Cash-out Refinances – Need to get cash out of your current home?  Need to do a cash-out refinance on a 2nd home or investment property?  We can now accomplish both these feats with a traditional, Fannie Mae, 30-year fixed mortgage. 

Unfortunately, many lenders will NOT be adopting these direct guidelines from Fannie may.  Many large banks, brokers and institutional lenders will be enacting "over-lays" that limits access to these enhanced guidelines.  Lucky for you, Movement Mortgage is moving forward with all these available scenarios.  If you are planning to buy a home or refinance in 2016, let me put you in touch with a solid lender. 

Published with permission from Scott Groves. 

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