I find that the average home buyer doesn't realize how much lending has evolved. Depending on your personal financial situation it may have evolved for the good but, for others not so much. Potential borrowers can't keep up probably because the rules of the lending game change so rapidly it's just too overwhelming.
So what is changing?
Any debt with fewer than ten payments remaining will no be included in the potential borrowers monthly obligations (before anything with less than ten payments was not included). Debt that doesn't have a monthly payment being reported, deferred student loans for example will be assigned a payment equal to 5% of the outstanding total debt. respect to revolving and installment debt.
What does this mean?
If you have only 9 months left on your car payment but, it's a large monthly payment it could push you above the maximum debt to income ratio and therefore lower the loan amount that you qualify for. The same goes for a borrower with large student loan debt, although it may be currently deferred 5% of the balance will now be factored into your debt ratio.
The good news coming from Fannie Mae's changes today?
GIFT MONEY, buyers of owner occupied single-family homes, condos, townhomes can use downpayments comprised 100 percent of gifted and/or granted monies. Prior to today they were required to use a minimum of 5% from their personal money. This does not apply to those buying an investment property or second home, the 5% downpayment from personal funds still applies in that scenario.
MORE GOOD NEWS, the maximum debt to income ratio isn't changing and neither is the minimum FICO score requirement.
Visit http://efanniemae.com for complete information on today's changes or talk to a qualified, trustworthy loan officer. It's important to have someone well versed in today's lending world working for you.