Seems like there are never ending changes in the mortgage industry. Some changes seem to help buyers, other changes hurt buyers. One thing is certain, interest rates are still low for now! But, rates are suppose to go up in mid 2015. I don't think that will surprise anyone. So whether you are a buyer or seller, changing interest rates can / will have an effect on you. That effect could be very negative.
Good News
FHA, Fannie Mae, and Freddie Mac have announced their 2015 maximum loan limits in the D.C. Metropolitan will remain at $625,500. This is good news for home buyers since FHA and Agency financing is less cumbersome than non-conforming requirements. FHA allows for a 3.5% down payment to its loan limit and the Agencies allow a 10% down payment for loans $417,001-$625,500.
Bad News
"Home buyers who are retaining their current residence for later sale or rent face increased payment reserves requirements. Conventional loan programs require that the applicant demonstrates 6 months of payment reserves on the new home and the current residence. This guideline is reduced to 2 months payment reserves for each property if the lender provides an appraisal on the former residence showing 30% equity. Guidelines also require 30% equity if the lender is offsetting the current home with a rental lease. The reserve requirement can be difficult to meet for some buyers, however retirement accounts can be part of the reserves at 60% of the current account balance."
A Snippet From Mortgage Market Intelligence
Early in the week, bond prices tumbled following hawkish comments from Federal
Vice Chairman Stanley Fischer and New York Fed President William Dudley.
At the Wall Street Journal CEO Council annual meeting,
Vice Chairman Stanley Fischer said the U.S. may be on the verge of a long-awaited jump
in wages. Fischer stated “If the labor market continues to strengthen, and if we see some
signs of inflation beginning to increase, then the natural thing is to get the interest rates up.
And we call it normalization,” adding near zero interest rates have been in place for
several years are far from normal. Fischer said the first rate increase will be very important. " There is a process that is being set off when the first step starts- interest rates are going to go up and they are going to keep going up for some time," he said.
New York Fed President William Dudley, a permanent voter on FED monetery policy, said
the Fed will conduct more aggressive rate increases if the financial markets do not tighten
as expected. Dudley said it seems reasonable to expect the first rate increase from near zero rates around mid 2015.
Mortgage Acts and Practices - Advertising Disclosure
Remax Distinctive is not a mortgage lender, and Jeff Pearl is not a licensed loan officer.
This information is for informational purposes only, and should not be relied upon by you.
You should contact any lender of your choice to learn more about its mortgage products,
and your eligibility for such products.
My feeling is that rates will start to go up in spring of 2015. If you're a potential buyer, keep a close eye on the changing market conditions. Keep on top of your credit, income , spending, and savings.
As rates rise, you might get shut out of buying, or possibly you will have to buy smaller, less expensive home than what you had planned. Don't panic, but don't wait too long if you don't have to. You don't want higher rates to short circuit your home buying plans.
Jeff Pearl | Lic in VA
Remax Distinctive - McLean VA
703-727-4876
Homes | Land | Farms | Historic
Equal Housing
Comments(2)