Wednesday, March 13, 2013

More Affordable Mortgage Options Coming

Charleston, South Carolina Real Estate | Real Estate Mount Pleasant, SC | Isle of Palms | Downtown Charleston | Daniel Island Real Estate

We finally have some good news for the real estate community coming out today. CNBC reports that FNMA (Fannie Mae) is loosening their purse strings. What's this mean for home buyers? Well, up until recently FHA was the primary buyer of low down payment purchase loans in the United States because Fannie Mae lost so much money during the housing crisis. As a one time founder and CEO of a mortgage company in Charleston, SC with over 13 years experience in mortgage lending I can honestly tell you this is good news not just for home buyers in Charleston,SC, but anyone looking to buy in the United States. 

FHA became the "big dog" for the last few years taking the lion's share of mortgage paper from first time home buyers because FHA was still allowing the lowest money down at 3.5% at the lowest cost. This morning reports from the MBA (mortgage bankers association) released news that FNMA wants back in.

Why is this happening now? Well, for a couple reasons. Mortgage insurance premiums are set to increase in April on FHA insured loans which will send the lending costs to borrowers upward while FNMA has managed to keep their mortgage insurance premiums down. So for buyers who are looking to put down 10% or less this makes the conventional loan route now the better choice. Mortgage lenders will be happy to hear this too. The FHA has tougher approval guidelines than conventional loans so loan officers are more inclined to push conventional from a processing standpoint, because historically they are easier and faster to get approved and closed.

Starting in 2008 FHA launched ahead of the conventional loan market as the leading provider of low down payment lending options because their cost to borrow was cheaper. Evidently, Ms. Fannie Mae want back in the game and so far in 2013 have purchased 18% more of the low down payment "home buyer" loans that have come to the secondary market.

No word yet on what the nations other large GSE, Freddie Mac is thinking about doing. So... The big question now is.. What does this mean for Charleston, SC real estate agents and first time home buyers in the Charleston, South Carolina area? The same as it does for everyone in the United States more lending options for your loan officer to shop for you. Don't get too excited just yet, these are still vanilla loans and the days of multiple, different, and flexible lending products of yesteryear are long gone it is a step in the right direction. The bottom line to all this is with low mortgage rates, more affordable housing prices, and lenders looking to provide money for buyers it's shaping out to be a possible beginning to an honest rebound.