Tuesday, March 23, 2021 / by Russ Phillips
Will Fannie Mae's recent actions make things easier if you're trying to buy your next home? Maybe.
There's so much buyer demand out there right now...and not enough housing supply. So you know what that means... Properties selling fast and often in bidding wars.
New action from Fannie Mae/Freddie Mac may help ease the situation. At least we hope. They have decided that Non-Owner Occupant loans should be no more than 7% of their business. So, standards for investors and second homes are getting increased.
See, in today's world, most loans are sold after closing. Often they are packaged up and sold to Fannie Mae...which means that while the loan officer qualifies you, you have to fit ("conform") to Fannie Mae standards.
If you're an investor buying a home that you won't occupy, interest rates just went up, and so did down payment requirements.
How might this help other buyers? Simply put, it should take SOME investors out of the buyer's market and maybe that will ease up on the demand a bit.
A HUGE part of the demand we are seeing in the resale world is coming from out of the area, and unfortunately (for owner-occupant buyers), many are showing up with huge sums of cash. People requiring financing are put at a disadvantage, having to compete with that.
So...we will see if this slows things down a bit. For now, I would not hold my breath. So much of what is happening is based on the ability to get cheap money. And some sellers are fine with an offer that has a loan, so long as the buyer waives appraisal contingencies.
I asked our preferred lender this morning about what they thought it would take to level off demand some and the response was "If interest rates climb back up above 4%." As old as I am, 4% still seems like an incredibly cheap interest rate. When we moved in 1999, I had an 800+ credit score and was thrilled when I locked in at 7.75%. There's a little dose of perspective!
New action from Fannie Mae/Freddie Mac may help ease the situation. At least we hope. They have decided that Non-Owner Occupant loans should be no more than 7% of their business. So, standards for investors and second homes are getting increased.
See, in today's world, most loans are sold after closing. Often they are packaged up and sold to Fannie Mae...which means that while the loan officer qualifies you, you have to fit ("conform") to Fannie Mae standards.
If you're an investor buying a home that you won't occupy, interest rates just went up, and so did down payment requirements.
How might this help other buyers? Simply put, it should take SOME investors out of the buyer's market and maybe that will ease up on the demand a bit.
A HUGE part of the demand we are seeing in the resale world is coming from out of the area, and unfortunately (for owner-occupant buyers), many are showing up with huge sums of cash. People requiring financing are put at a disadvantage, having to compete with that.
So...we will see if this slows things down a bit. For now, I would not hold my breath. So much of what is happening is based on the ability to get cheap money. And some sellers are fine with an offer that has a loan, so long as the buyer waives appraisal contingencies.
I asked our preferred lender this morning about what they thought it would take to level off demand some and the response was "If interest rates climb back up above 4%." As old as I am, 4% still seems like an incredibly cheap interest rate. When we moved in 1999, I had an 800+ credit score and was thrilled when I locked in at 7.75%. There's a little dose of perspective!
