Thursday, December 18, 2014

Only 3% Down for Home Purchase? YES!

Yesterday, HousingWire reported that both Fannie Mae and Freddie Mac formally announced their 3% down options on home purchases. Fannie Mae’s plan will be effective December 13, 2014 while the Freddie Mac plan will be available March 23, 2015. The HW article quotes FHFA Director Mel Watt:

“The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3% down. These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices.”

This is great news to millions of purchasers that have been denied the opportunity to own their own home because of the almost impossible burden of saving for a 20% down payment.

Will these programs create future challenges?

Mr. Watt also addressed this concern:

“To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness. In addition, the new offerings will also include homeownership counseling, which improves borrower performance. FHFA will monitor the ongoing performance of these loans.”

Just last week, the Urban Institute revealed data showing what impact substantially lower down payments would have on default rates in today’s mortgage environment. Their study revealed:

“Of loans that originated in 2011 with a down payment between 3-5 percent, only 0.4 percent of borrowers have defaulted. For loans with slightly larger down payments—between 5-10 percent—the default rate was exactly the same. The story is similar for loans made in 2012, with 0.2 percent in the 3-5 percent down-payment group defaulting, versus 0.1 percent of loans in the 5-10 percent down-payment group.”

Bottom Line

 

I believe the Institute concluded this perfectly: 

“Those who have criticized low-down payment lending as excessively risky should know that if the past is a guide, only a narrow group of borrowers will receive these loans, and the overall impact on default rates is likely to be negligible. This low down payment lending was never more than 3.5 percent of the Fannie Mae book of business, and in recent years, had been even less. If executed carefully, this constitutes a small step forward in opening the credit box—one that safely, but only incrementally, expands the pool of who can qualify for a mortgage.”

I look forward to speaking with you soon, so we can get you started on your path to home ownership!


Elizabeth Scott, Realtor®, Broker
BE SAVVY...CALL THE SMART REALTOR!

2013 Diamond Award – High Sales Volume
e-PRO, Strategic Pricing Specialist
Fathom Realty NC, LLC        
Phone: 919.306.9699
Email

Wednesday, December 10, 2014

No Room for Elves?


Wishing you and yours a very Merry Christmas and warm wishes for the Holiday Season!



BE SAVVY...CALL THE SMART REALTOR

Elizabeth Scott, Realtor®, Broker
2013 Diamond Award – High Sales Volume
e-PRO, Strategic Pricing Specialist
Fathom Realty NC, LLC        
Phone: 919.306.9699
Email

Tuesday, November 18, 2014

Need More Room?



Elizabeth Scott, Realtor®, Broker
2013 Diamond Award – High Sales Volume
e-PRO, Strategic Pricing Specialist
Fathom Realty NC, LLC        
Phone: 919.306.9699
Email


Sunday, November 9, 2014

Special Benefits for Hometown Heroes!

Are you a Hometown Hero?  Are you a veteran, active military, educator, police, firefighter, physician, nurse or other medical professional? 

I am delighted to say that we have partnered with Hometown Heroes so we can give back to those men and women who help make our local communities a better place to live.  Great Real Estate benefits for home buyers, sellers, and/or refinancing.   
 
  

Contact me today for more information.  And thank you for your service!

BE SAVVY...CALL THE SMART REALTOR!

Elizabeth Scott, Realtor®, Broker
2013 Diamond Award – High Sales Volume
e-PRO, Strategic Pricing Specialist
Fathom Realty NC, LLC        
Phone: 919.306.9699
Email