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Fannie Mae announces 97% LTV Options!

Fannie Mae announces 97% LTV Options

For First-Time Home Buyers and Limited Cash-Out Refinance of Fannie Mae Loans

 

Only 1 buyer needs to be a first time homebuyer. Release of the program is December 13, 2014.

 

According to consumer research conducted by Fannie Mae, the primary barrier to homeownership for first-time home buyers is saving money for the down payment and closing costs. In support of ongoing efforts to expand access to credit and support sustainable homeownership, Fannie Mae is offering 97% LTV /CLTV/HCLTV financing to help home buyers who would otherwise qualify for a mortgage but may not have the resources for a larger down payment, and a refinance option for Fannie Mae loans. These options are designed to help lenders serve creditworthy borrowers and expand business opportunities. Refer to Selling Guide Announcement SEL-2014-15 for details. 

Key Features (apply to all options)

  • Desktop Underwriter® (DU®) underwriting required
  • 1-unit principal residence (including condos and PUDs; manufactured housing is not eligible)
  • Fixed-rate mortgage with maximum term of 30 years
  • Reserves (if required per DU) may be gifted

fannie mae

 

Definitions

First-time home buyer (FTHB): At least one buyer must not have owned any residential property in the past three years
(full definition).
Home-buyer education and counseling: As defined in the Selling Guide, Subpart B2-2-06: Home-buyer Education and Counseling

Selling Guide Announcement SEL-2014-15 | DU Version 9.2 Release Notes (updated December 8, 2014) |

3% Down Mortgages

3% Down Mortgages

Fannie Mae announced in Selling Guide Announcement SEL-2014-15 an increase in the maximum LTV, CLTV, and HCLTV ratios for certain principal residence transactions. Fannie Mae will allow LTV ratios greater than 95% up to a maximum of 97% for:

  • MyCommunityMortgage® (MCM®) purchase transactions if at least one borrower is a first-time home buyer and pre-purchase home-buyer education and counseling is completed,
  • standard purchase transactions (non-MCM) if at least one borrower is a first-time home buyer, or
  • standard limited cash-out refinances (non-MCM) of existing Fannie Mae loans.

All loans must be fixed-rate and secured by a one-unit principal residence. Manufactured housing is not

permitted. All loans must be underwritten with Desktop Underwriter® (DU®).

 

For more info please click here: FAQs

 

 

3% Down Mortgages from Freddie Mac Announced!

3% Down Mortgages from Freddie Mac have been announced!

From Freddie Mac Blog

December 8, 2014

3% Down Mortgages

3% Down Mortgages

Today Freddie Mac launched Home Possible AdvantageSM, a new affordable mortgage with a down payment option as low as 3%. Here are the answers to your top questions:

Who is this mortgage for?
The Home Possible Advantage mortgage is for low and moderate-income borrowers with limited savings, including first-time homebuyers.

What do I need to qualify for it?
Generally, you need to meet minimum credit requirements, earn no more than 100% of your area median income and have the funds to meet the down payment requirements and closing costs. First-time homebuyers must participate in an acceptable borrower education program, like Freddie Mac’s CreditSmart.

Can I use gift funds as my down payment?
Yes, the 3% down payment can come from a number of sources, including personal funds, gift funds, grantsand affordable second mortgages.

Will I have to pay private mortgage insurance (PMI) on Home Possible Advantage mortgage? How much will this add to my payment? 
Yes, like all conventional, conforming mortgages backed by Freddie Mac, loans without at least a 20% down payment require some form of credit enhancement or insurance, usually in the form of PMI. This serves as an added insurance policy that protects the lender/investor if you are unable to pay your mortgage.

The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $40 and $80 per month for every $100,000 borrowed.  And, once you’ve built equity of at least 20% in your home, making the amount you owe on your mortgage 80% or less of its value, you can cancel your PMI and remove that added expense from your monthly payment.

Can I use it to refinance my current mortgage?
Yes, Home Possible Advantage mortgages can be used for a “no cash out” refinance of an existing mortgage. It’s available in 15-, 20-, and 30-year fixed-rate terms.

Why is Home Possible Advantage different than the low down payment mortgages of the past?
The keys to responsible lending are responsible underwriting and product design, and we designed Home Possible Advantage with the appropriate credit underwriting requirements for today’s market. Home Possible Advantage has tougher credit standards than low down payment mortgages of the past, including lower DTI ratios, fixed-rate terms and requires full documentation, owner-occupation and housing counseling.

Where can I get more information on Home Possible Advantage?
Visit freddiemac.com or talk to a lender or a housing counselor about your options.

What other options are available to me if I don’t qualify for a Home Possible Advantage mortgage?
You have a number of choices even if you don’t have a 20% down payment – a growing number of today’s buyers are putting down between 5 and 10%. Sure, you’ll have to pay PMI, but it means you’ll be able to take advantage of today’s historically low mortgage rates and affordable home prices in many parts of the country. Talk to a lender today.

What advice do you have for homebuyers in today’s market?
Do your homework. Understand how much you can afford and what to expect during the mortgage process.

See the Original blog link for 3% Mortgages from Freddie Mac here.