With several changes in the last couple of months, Fannie, Freddie and FHA have made it much easier for first time homebuyers! There have been some major changes in the last two months that are all positive and will make financing your home easier.
Fannie and Freddie both came out with 97% mortgages (3% down) for first time homebuyers. Then last week FHA announced that they were going to reduce the monthly mortgage insurance by .50%, saving homeowners money on their mortgage payment.
What does all this mean to you? For those using FHA financing, it means you will save money on your payment. The new mortgage insurance rate is effective with all FHA case numbers as of January 26, 2015. For those that are in the process of buying a home, you may be able to get a new case number at that point – depending on where you are in the process. Your appraisal has to be dated after the case number so you may not have time – but it could be an option. For those that have recently financed a home using FHA financing, you may want to look at refinancing your loan. With interest rates low and the mortgage insurance dropping, it may save you enough money to make refinancing a good choice.
For those looking to use conventional financing, being able to put 3% down may mean being able to buy a home sooner. If you were going to use FHA financing, you may want to look at conventional financing at 3% down. Once you have paid your mortgage down to 80%, you will be able to eliminate your mortgage insurance (there are some additional requirements for this) – FHA does not allow you to drop the mortgage insurance. You may be able to qualify for reduced mortgage insurance with Fannie Mae's My Community Program.
The down payment is usually one of the biggest obstacles for those financing a new home. With the lower MI for FHA, it makes that program more affordable. With the reduced down payment for Fannie and Freddie, it makes it easier to save for the down payment. And all three programs will allow the down payment to come from gift money!
With interest rates very low right now and with the down payment easier to handle, it is a great time to buy a new home! To find out what you can qualify for, contact your loan officer and see if it is the right time for you to buy!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, NMLS#150953 – Email – Website
