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Fannie Mae's turnabout on Declining markets. Will it really help?
Fannie Mae announced that they will no longer require an extra 5% down payment for purchases in "Declining Markets" beginning June 1.   The real question is will this change help.   The answer is Yes for some borrowers, and not at all for others.   There are 2 factors above and beyond Fannie Mae's basic guidance that will continue to hinder homebuyers looking to put less money down.   Mortgage Insurers have increased minimum Fico requirements for all loans, especially those over 90% loan to value.   Please note that FHA loans do not have Fico minimums at this point.   The other factor effecting the quality of the Fannie Mae loan is the "risk premiums" associated with loans over 90% Loan to value.  Fannie Mae loans have higher risk premiums (IE higher rates) for these loans.   Once again, FHA does not penalize borrowers for opting to put the standard 3% down payment.   The rate is the same for 90%, 95% or 97% FHA loans.  Fannie Mae rates may vary as much as 1% on these amounts.  Now that's alot of money.   You can see why FHA loans are quickly becoming the most popular loans in the US again. 
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