Aundrea Beach-Greco | Mortgage Lender NMLS 333739: guideline changes

Saturday, July 29, 2017

Biggest Lender Guideline Changes Since Recession

Fannie Mae announced guideline changes as of 7/29/17.

Did you know... The No. 1 reason that mortgage applicants get declined for a home loan?
Yes, you guessed it... debt-to-income ratios (DTI)!

Great news!! One of the biggest changes today from Fannie Mae is they are raising allowable debt-to-income ratios to allow for more people to qualify.

Here are some of the new changes:

DEBT TO INCOME

Fannie Mae is now looking to allow more homeowners to enter the market as it increases its DTI limits from 45% to 50%.

DTI is a borrower’s total amount of debt, including credit cards, student loans, auto loans and mortgages, versus their total income.

- What does that mean for you?

In an example... if someone made $10,000 gross income per month, they could qualify for a total outlay of $4500 including the proposed new mortgage but now with the new guidelines, they can go up to $5000 per month. That's $500 more dollars - that's HUGE!

* Effective for new loan files submitted on or after the weekend of July 29, 2017.

DISPUTED CREDIT TRADELINES

For example, a loan application with a disputed tradeline that received an Approved recommendation from DU® will not be required to submit further documentation on the said disputed tradeline. In the past we had the client get the "dispute" verbiage removed and then do a rescore or repull. Not always a favorable outcome.

ARM LOAN TO VALUE (LTV) RATIOS

Fannie will align the following ratios of an adjustable-rate mortgage with that of a fixed-rate mortgage: (a) LTV or loan-to-value, (b) CLTV or combined loan-to-value, and (c) HCLTV or home equity combined loan-to-value, of up to 95%.

SELF-EMPLOYMENT INCOME:

Fannie has an updated documentation requirement to verify self-employment income. Currently we require 2 years personal and business tax returns, however it is expected that more could qualify for one year’s worth of personal and business tax documents. This will be on a case by case basis but opens up more options for the self-employed and entrepreneur.

If you were turned down for debt ratios being too high in the past, now is the time to re-apply and see where you stand. Rates are low and it's a great time to buy.

Aundrea
702-326-7866