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Yet another reason not to wait…

Still considering buying or refinancing?  Well if you haven’t already applied, your chances of qualifying just went down… again.  Last weekend Fannie Mae released an updated version of its Desktop Underwriter program used by lenders across the nation.  Desktop Underwriter Version 8.0 made getting a conventional loan even tougher.   The changes likely to impact most borrowers are to credit and income guidelines.

Credit Scores
Any representative credit score below 620 will receive an “ineligible” finding.  That means regardless of what other compensating factors you may have, without a 620 score, getting a conventional mortgage is now next to if not completely impossible.

Income Qualifications
Maximum debt-to-income ratio (DTI) was lowered to 45%.  In the past, with compensating factors (significant cash reserves, excellent credit, very low Loan-to-Value, etc) you could make up for a higher debt ratio on provable income.  That is no longer the case. 

More changes are expected
As the industry continues to clean itself up, be prepared for even more changes.  The next big change will likely come from FHA as it has said publicly that it is likely to increase the minimum down payment it requires from its current 3.5% level to 5%. 

I didn’t need all this last time!
MONEY IS AVAILABLE but only for those that really qualify and as requirements tighten, be prepared to pony up the documentation for your income and cash reserves as lenders are now dotting all I’s and crossing all T’s.  Having a stash of cash no longer makes up for a lack of provable income, in today’s world, you need both.

YOU MUST ACT NOW!
Sounds like a sales pitch but with the current tax incentives for buying a home combined with historically low-interest rates and trends toward tougher qualifying standards.  Making your move now could mean the difference in getting the loan you seek and the home you dream of.   These recent changes show us that what you qualify for today, you may not tomorrow, even when nothing in your world has changed. 

For questions regarding how these changes will impact you, or to see if you will qualify, please contact Neil Sweren directly at 443-738-9121.

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