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Cincinnati Home Buying #14 - Your Lender's Expertise Is Critical!
As the real estate and mortgage markets continue to recover, we are seeing more and more restrictions on lending to try and right the ship. One monster that started to surface way back in July of 2007 was the "Declining Markets" guidance sent out by FannieMae (Federal National Mortgage Association). In short, FNMA began to notice in their massive data base that there are areas of the country that are seeing consistent declines in market value, yet they don't have a standard industry definition of what constitutes a declining market.So what does this all mean?Well, if your lender receives this message when underwriting your conventional mortgage loan and you are not putting any money down, you will be penalized. (An FHA loan is another option.) The lender must immediately lower the highest acceptable loan-to-value ratio by 5%. So, your 100% loan just became a 95% loan, no matter how you slice it. You may be out of luck when looking at conventional financing. One action that you can take to avoid the surprise of this scary, but protective rule is to have your lender run your file through the automated system before even making an offer. This way you will know ... more

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