In an effort to limit risky borrower behavior, Fannie Mae announced a new round of mortgage guideline changes last week.
Unlike previous its previous 20-plus updates that raised income requirements and minimum credit scores (among other changes), Fannie’s latest guideline tweaks focus on the value of its underlying mortgage assets — home equity.
Effective December 13, 2008, Fannie Mae will require larger equity positions on some of its insured purchases and refinances.
A few of the updates include:
- Limiting primary residence, cash out refinances to 85% loan-to-value
- Requiring 10% downpayments on second/vacation homes
- Requiring a 25% equity position on all investment property refinances
And, while the above changes represent 5 percent equity increases over the current mortgage guidelines, some of the other updates call for increases of as much as 20 percent.
As we head into the election and Congress mulls over another economic stimulus package, it’s unclear if mortgage rates will move higher or lower as we close out the year. We do know, however, that getting approved for a conforming mortgage will, in general, be harder come December 13, 2008.
If you’re finding yourself on the fence about your next move — whether it’s to buy or to refinance a home here in Winter Haven or the rest of Polk County, FL — consider taking the necessary steps before the guidelines change.
Low, low mortgage rates don’t mean much if you don’t have enough home equity to get a home loan approval.
(Image courtesy: The New York Times)
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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