Possible New Changes To The Mortgage Industry Coming VERY SOON
July 28th, 2008 categories: Real Estate News
Some times we need our Uncle… Some times we don’t.
With Fannie and Freddie Mac in trouble with debt Uncle Sam has had to step in and make some quick revisions to the current mortgage industry to hopefully strengthen it. There was a House Rescue Bill that was approved on July 23rd that should be signed by the President in to law very soon.
Our nation holds around 12 trillion dollars of mortgage debt. Fannie and Freddie together hold around 5.2 trillion of that. If those guys go under, we would be in trouble. So… The 700 page Rescue Bill has a few bullet points that I will share with you that will hopefully strengthen the industry and continue to enable qualified buyers to purchase.
- The bill includes provisions to increase the market share of mortgages insured by FHA. It raises loan limits to high-cost areas, allows the agency to vary the premiums it charges borrowers based on their credit risk, allows for lower monthly payments for borrowers who make on-time payments for the first 5 years of a loan and extends the max loan term of the FHA single- family loans to 40 years.
- The house amendment provides $300 billion in new guarantees to help refinance at-risk borrowers into mortgages that borrowers could afford to pay.
- Down Payment Assistance Programs are banned in the program. Nehemiah, Genesis, and Ameridream would be affected.
- FHA minimum down-payment would increase from 3% to 3.5%.
- Lenders may receive a government incentive to lower interest rates and loan amounts for current mortgage holders experiencing trouble.
Until the President signs this bill in to effect these bullet points could change. Nevertheless, if you are a First Time Buyer and taking advantage of a FHA loan it would be in your best interest to move as quickly as possible or you can expect to pay more before you know it.
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