In the past few months, the mortgage industry has changed, and many of the more flexible mortgage programmes have been shut down. As a result, borrowers have been looking for home loans that fit their credit and income profiles. Jim Kemish, an expert on mortgages in Florida, talks about the amazing Fannie Mae American Dream Initiative and how it might help you make your dreams come true.
It's the end of a time
In October 2006, the subprime mortgage industry started to fall apart. Wall Street investors stopped buying subprime loans because they were worried about the continuing drop in home prices across the country and the number of mortgages that went into default. By March 2007, the subprime industry as we knew it was completely gone.
History
People who had never owned a home before took advantage of these lenders' easy rules and flooded the real estate market. About 22% of all homes bought in the last five years were paid for with these subprime mortgage products.
How the Market Changes
Since the subprime industry is no longer around, millions of people who want to buy a home are now looking for other mortgage products that fit their finances and credit profiles. Even more important is the fact that millions of people have already bought homes with subprime loans and now want to refinance. Most of the time, these homeowners have adjustable rates that could make their payments too high to afford. If these people don't find another way to pay for their homes, they may have to sell them.
Here Comes the Future
There is a solution that we really think you should try. The American Dream Commitment from Fannie Mae is the most exciting and affordable way to get a home loan that we have seen so far. Fannie Mae says, "Many Americans are still being ignored, underserved, and overcharged when they try to buy a home at an affordable price." Fannie Mae says that one of its goals is to "make it easier for first-time homebuyers to own their own homes and help raise the homeownership rates of minorities, with the ultimate goal of closing the homeownership gap completely."
Fannie Mae Saves the Day
This means that borrowers with less-than-perfect credit and tight budgets can get home loans that are flexible, easy to work with, and cheap. But there's more. If you read the rules carefully, you'll find some amazing and well-thought-out criteria. Among these rules are a surprising and generous allowance for "undocumented income," a wider range of acceptable seller contributions, and no saving or asset reserve requirements at all. All of these flexible rules make it possible for the lowest-cost mortgage programme with no money down to exist. Let's look at a few of the most important parts.
It's easy to get credit.
The mortgage programmes that don't require a down payment now have the easiest credit score requirements. The rules allow for a score of 620, but lenders may approve loans with scores as low as 600 if there are some small factors that make up for it.
No Need for a Housing History
No previous housing history is needed, which is another flexible credit requirement. In the past, if you wanted to get a mortgage with no money down, you had to show that you had always paid your rent on time. This programme is not like the rest. You might have been living with your parents or a partner and didn't have to pay rent each month.
Income Limitations
Borrowers can make up to 125 percent of the HUD Median Income for the area where the property is located. For example, Florida mortgage borrowers in Palm Beach County can still get help from the programme even if they make up to $69,875 per year. Mortgage applicants in Georgia who want to buy a home in Fulton County can make up to $86,625.
Income limits may be taken off the table.
Do you make too much money? There's a good chance that you can still get in. Fannie Mae will take away the income limit completely if the property you are buying or refinancing falls into one of six categories that they have decided deserve flexible financing. I can feel your dismay. You might be thinking that your home is not in any of these places. You could be shocked. Eight out of ten of the homes we look at for our clients are in one of these areas.
Amazing Allowance for No Income Verification
The fact that undocumented income is okay with this programme might be the most surprising thing about it. Fannie Mae will let you use up to $1,000 per month of income from a reliable source. There's no need to prove where the money comes from or how much it is. Just write it down on your application. This rule gives a nod to people who work full-time but also have a part-time, weekend, or evening job. As a Florida mortgage broker, I'm happy to help these hard-working borrowers who might not have been able to get a loan otherwise. Some examples of acceptable income are a finance worker who helps people do their taxes on the side, a handyman who also works as a carpenter, or a labourer who mows lawns on the weekends.
Bring your dream to life
Ask your friendly mortgage broker about the Fanny Mae America Dream Initiative right now. You should think about this programme if you want to buy a new home or need to refinance the one you already have.
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