Fannie Mae...Related to Ellie Mae? Why Should Kansas City Home Buyers Care?
Not a member of the famed Clampett family, Fannie Mae is a federal mortgage insurer....Shameless reference to the Beverly Hillbillies, for those of you over 40....
Fannie Mae, and it’s sister/brother agency, Freddie Mac, underwrite the mortgages you and I use to purchase a home...more specifically, these organizations enforce the guidelines that allow mortgages to be sold to investors....And resold to other lending institutions.
Why is that important...?
If you’re an Overland Park, Kansas home seller, you’d better know if the new guidelines will hurt or help your cause....
If you’re an Olathe, Kansas homebuyer, these new guidelines might make it easier to buy your new home.
The Fannie Mae guidelines define the value of the mortgage every bit as much as the borrower’s capabilities, or the lender’s rules. Unless the mortgage meets Fannie Mae guidelines, the lender is required to hold the loan in-house, limiting the ability of the lender to resell the mortgage on the market as a securtized investment.
If your Gardner, Kansas home loan doesn’t meet the guidelines, the bank is stuck with you as a client. Forever. Banks prefer the flexibility to sell their loan portfolios as they wish, so meeting the Fannie Mae guidelines is a smart thing for a bank to do....
NEW lending guidelines being rolled out by Fannie Mae will make securing a mortgage a lot easier for some borrowers but harder for others.
Why do you care? Well, myself and my clients like good news...do you?
The rules, effective on Dec. 13, 2010 will allow buyers to use gifts and grants from nonprofit groups for their minimum 5 percent down payment, which is the threshold set by Fannie Mae, the government-owned company that sets lending standards and buys mortgages from lenders. (Freddie Mac is considering similar new guidelines, said Brad German, a spokesman.)
Previously, borrowers had to contribute a minimum 5 percent down payment from their own funds, but additional down payment money could be from a gift (though never from a home seller). The exception was for borrowers who put 20 percent down: all that money could come as a gift.
Because many lenders now require a down payment of 10 percent or more, the new rules mean that borrowers will still have to come up with extra funds — either their own or gifts.
I read that passage several times to be clear ….here is our translation: 10% down payment is required by most lenders. Half of that 10% can come from a gift, grant etc. In essence this is allowing buyers to buy with 5% of their own money down. For those down payment challenged buyers the trick will be finding someone to give them 5% or being timely with the release of any grant money. Generally speaking, the grant money goes to certain buyers…in specific areas.(read teachers, firefighters, police etc. who are buying primary homes in areas deemed to need more stable homeowners.)
Still, “this is definitely going to help upgrade buyers and young couples who for whatever reason don’t have enough money and are getting some (help) from their families,” said Edward Ades, the owner of Universal Mortgage, a broker in Brooklyn.
The gift rules apply only to single-family principal residences, including town houses, co-ops and condominiums, and covers mortgage amounts in excess of 80 percent of the property’s value. Also, there is a limit on the loan balance — $729,000 in high-cost areas like New York City, and $417,000 in other areas.
These guidelines are important, as gifting sourced down payments now make up a substantial component of home purchases....maybe yours does as well?
With every ray of sunshine there can be a little rain, stay tuned for part 2....
Not a member of the famed Clampett family, Fannie Mae is a federal mortgage insurer....Shameless reference to the Beverly Hillbillies, for those of you over 40....
Fannie Mae, and it’s sister/brother agency, Freddie Mac, underwrite the mortgages you and I use to purchase a home...more specifically, these organizations enforce the guidelines that allow mortgages to be sold to investors....And resold to other lending institutions.
Why is that important...?
If you’re an Overland Park, Kansas home seller, you’d better know if the new guidelines will hurt or help your cause....
If you’re an Olathe, Kansas homebuyer, these new guidelines might make it easier to buy your new home.
The Fannie Mae guidelines define the value of the mortgage every bit as much as the borrower’s capabilities, or the lender’s rules. Unless the mortgage meets Fannie Mae guidelines, the lender is required to hold the loan in-house, limiting the ability of the lender to resell the mortgage on the market as a securtized investment.
If your Gardner, Kansas home loan doesn’t meet the guidelines, the bank is stuck with you as a client. Forever. Banks prefer the flexibility to sell their loan portfolios as they wish, so meeting the Fannie Mae guidelines is a smart thing for a bank to do....
NEW lending guidelines being rolled out by Fannie Mae will make securing a mortgage a lot easier for some borrowers but harder for others.
Why do you care? Well, myself and my clients like good news...do you?
The rules, effective on Dec. 13, 2010 will allow buyers to use gifts and grants from nonprofit groups for their minimum 5 percent down payment, which is the threshold set by Fannie Mae, the government-owned company that sets lending standards and buys mortgages from lenders. (Freddie Mac is considering similar new guidelines, said Brad German, a spokesman.)
Previously, borrowers had to contribute a minimum 5 percent down payment from their own funds, but additional down payment money could be from a gift (though never from a home seller). The exception was for borrowers who put 20 percent down: all that money could come as a gift.
Because many lenders now require a down payment of 10 percent or more, the new rules mean that borrowers will still have to come up with extra funds — either their own or gifts.
I read that passage several times to be clear ….here is our translation: 10% down payment is required by most lenders. Half of that 10% can come from a gift, grant etc. In essence this is allowing buyers to buy with 5% of their own money down. For those down payment challenged buyers the trick will be finding someone to give them 5% or being timely with the release of any grant money. Generally speaking, the grant money goes to certain buyers…in specific areas.(read teachers, firefighters, police etc. who are buying primary homes in areas deemed to need more stable homeowners.)
Still, “this is definitely going to help upgrade buyers and young couples who for whatever reason don’t have enough money and are getting some (help) from their families,” said Edward Ades, the owner of Universal Mortgage, a broker in Brooklyn.
The gift rules apply only to single-family principal residences, including town houses, co-ops and condominiums, and covers mortgage amounts in excess of 80 percent of the property’s value. Also, there is a limit on the loan balance — $729,000 in high-cost areas like New York City, and $417,000 in other areas.
These guidelines are important, as gifting sourced down payments now make up a substantial component of home purchases....maybe yours does as well?
With every ray of sunshine there can be a little rain, stay tuned for part 2....
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Blog post written by the Dowell Taggart Team of RE/MAX Best Associates
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