I received an important update from several of my lending partners today. The change will definitely have an impact on homebuyers and sellers. So what are these changes:
- Stated Income Loans will officially be a thing of the past, at least for Fannie Mae and Freddie Mac loans. There may be some financial institutions that continue to provide these as portfolio loans.
- Debt to income ratios will be tightening.
- Second Homes will no longer be a “loan category” under Fannie Mae and Freddie Mac. They will officially lend on “primary residences” or “non-primary residences”. Interest rates for non-primary residence loans will be at least 75 basis points higher than current rates.
I will admit that the changes in loan guidelines are not a surprise to me. Two years ago it was simply too easy to get a loan. Now the pendulum may swinging the other way. I believe there are a few valuable takeaways from this important news for both buyers and sellers.
For Sellers, your audience of qualified buyers continues to shrink. Be sure you price your property carefully.
For Buyer’s, if you are considered a marginal buyer today, you may want to pow-wow with your lender and your Realtor and put together a strategy to make an offer ASAP. Or you may choose to wait until your financial situation improves.
