Advertising will often make consumers believe that they can walk into their local bank or call an online lender to get a mortgage. This may be fine as long as your situation is simple. However, a large percentage of mortgage applicants have situations that make them unique. Mortgage guidelines change very rapidly. There are tax consequences that differ between mortgage options. And, the mortgage needs to be considered a financial instrument that can help you build wealth over time.
You won’t get advice like this from the loan hacks at many of the big banks, credit unions, or online lenders. You need a true professional that studies the mortgage guidelines and everything surrounding the largest piece of debt that you will take on as a consumer. Below are a few recent rule changes that are examples of underwriting guidelines that most lenders won’t know.
Rule change on renting current residence:
Have you considered renting out your current home so you can upgrade? It just got much easier! In 2008 many people were buying their next home and then they would let their last house go to foreclosure. Fannie Mae put a rule in place called “Buy and Bail” to prevent this from happening. It made it virtually impossible to count the rent on your current residence, which meant you would have to qualify for the new house and your old one at the same time.
Fannie Mae recently back-tracked on this rule. If you find a tenant for your house, and have a signed lease agreement, you can now count the lease income to offset your payment. Lenders will take 75% of the lease amount and subtract your mortgage payment. This makes it much easier to qualify for your new home.
FHA Streamline Refinance for Investment Properties:
FHA loans are the most common type of financing for first-time homebuyers. Frequently the homeowners rent out their residence when they buy their next home. FHA loans are only available for owner occupied homes. However, FHA will allow what is called a Streamline Refinance, and they don’t even require an appraisal. The interest rates on those loans are the same as an owner occupied rate. This means that you aren’t stuck in your high interest rate loan. Contact us to see if you are eligible to lower your rate.
Salaried Borrower with Self-Employed Loss:
It is common for someone with a full-time job to also have a side business. The side business frequently shows a loss on their tax return, which can eliminate many from qualifying for a home. Fannie Mae recently made a change which isn’t known to most lenders. Now you can ignore any losses from self-employment, and use the full-time job to qualify.
This is an example of something that a lender won’t find in the guidelines. Fannie Mae periodically issues commentary on the guidelines, and this was recently included in that commentary. If your lender doesn’t take the time to study ALL of the changes, they might miss something that can save you money!
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