Those looking to borrow money for a Florida home purchase or refinance should be aware that getting approved for a Florida mortgage just got harder.
Key items to be impacted include but are not limited to credit scores, rules about private mortgage insurance (PMI), and conditions related to borrower debt-to-income (DTI) ratios .
In its official announcement, Fannie Mae says the updates minimize long-term lending risks. If that’s the case, this won’t be the last guideline change Fannie Mae makes — especially with loans with higher default rates.
Effective December 13, 2009, the bulk of Fannie Mae’s loans require a 620 credit score minimum. There are very few exceptions.
The second change relates to loans with private mortgage insurance.
Homeowners who pay less than 20 percent down on their Florida mortgage now have two choices where it comes to private mortgage insurance:
- Pay higher mortgage insurance premiums month-after-month
- Pay a one-time fee paid at closing to compensate for higher risk
As it stands, each of these choices result in higher consumer loan costs.
The third change deals maximum debt-to-income (DTI) ratio. Fannie Mae will no longer approve loans with debt ratios exceeding 45 percent except with very strong assets and very high credit scores.
In no case whatsoever may debt-to-income exceed 50 percent.
There are other changes, too, including the elimination of seldom-used mortgage products and additional risk-based fees for “expanded level” mortgage approvals. These updates affect just a small part of the population.
So, home prices are rebounding, mortgage rates are low, and — for 5 more months at least — there’s a federal tax credit for qualified buyers. You don’t have to buy a home now, but with mortgage guidelines sure to tighten in 2010, now may be a better time than later.
The best “deal” won’t matter if you can’t get qualified on your mortgage.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 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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I got a clear overview about the requirements to qualify for Florida mortgages. Excellent description.