Due to recent policy changes affecting government-backed loans which focus on the Federal Housing Administration (FHA) and secondary mortgage market giants Fannie Mae (The Federal National Mortgage Association) and Freddie Mac (The Federal Home Loan Mortgage Corporation), first-time home buyers could find it less costly to come up with a down payment or to afford private mortgage insurance (PMI). This is a result of the current administration lowering the premium that borrowers with an FHA-backed home loan must pay for mortgage insurance. This has been lowered from 1.35% to 0.85%.
The average home buyer is estimated to save up to $900 a year. The move will help save homeowners that want to refinance their mortgage as well.
Purchase a Home With 3% Down
Fannie Mae and Freddie Mac basically purchase home loans from lenders and package them as securities to be sold to investors. New guidelines on down payments are now being adopted which would make it possible for qualified borrowers to purchase a home with as little as 3% as opposed to the previous 5% minimum. The prevailing belief behind these moves is that the market wants to loan to first-time home buyers, however, it still remains important for them to have an adequate savings, enough income to afford the monthly payments, and a good credit record.
What This Means for First-Time Homebuyers
The bottom line is that, although these changes can be favorable to a first-time home buyer, chances of being approved are still improved by bringing more down payment money to the table and a consultation with a licensed Mortgage Loan Originator (MLO) is highly recommended. By leveraging their expertise, a home buyer can benefit from their guidance on whether an FHA or conventional loan makes more sense. Each individual is unique and can learn alot from their mortgage advisor including information about current interest rates and the affordability of the various home loan programs available.
It Pays to Work with a Licensed REALTOR®
I am a licensed Texas REALTOR® with JBGoodwin Realtors and I work in the San Antonio residential marketplace assisting buyers and sellers alike. We have the benefit of an in-house licensed lender, Premier Nationwide Lending, whose MLOs each have over 20 years of industry experience and are well-versed in the recent changes to the laws as well as offering many different loan programs to suit each individual borrower. They also have existing relationships with credit restoration companies for aspiring home owners with less-than-stellar credit reports who want to improve their scores to be able to qualify for a home loan. It's truly important not to give up on that slice of the American dream which can still be attainable with the right amount of effort!
Please feel free to contact me online or call 800.531.5207 to make your next homebuying experience an efficient success.