We at the YCL Real Estate Consulting Group are very happy to share this exciting news with all of our future Buyers. 2015 has heralded in good news for those looking to buy a home, especially for first time buyers. Effective as of January 2015, there have been two significant changes on two popular loan programs:
1. The FHA loan has dropped its annual government mortgage insurance (MI) premium by .5%.
2. Fannie Mae has lowered its minimum down payment requirement from 5% to 3% (for first time buyers only) on loans up to $417,000.
Regarding the FHA changes: MI costs have continually risen over the past few years to the point where it was making it harder to qualify for the FHA loan. The MI costs were almost double than that of its PMI counterpart on the conventional loans. However, this new lowering of the MI now makes the FHA a very affordable loan option especially when considering the FHA rates are lower than the conventional rates.
Regarding the Fannie Mae changes: After the Financial Crisis in 2008, 5% has been the minimum required down payment in order to obtain a conventional conforming mortgage. Now that this has been lowered to 3% to those who are buying for the first time, more people will have the opportunity to buy since less cash is needed. To clarify, a “First Time Buyer” is someone who has not owned a property in the past 3 years. Additionally, as long as at least one of the homebuyers meets these criteria and none of the buyers currently own any property, the new 3% down payment option is available.
Less cash needed to buy plus more affordable mortgage payments coupled with record low interest rates is a fantastic recipe for a great year ahead.
Mr. Carey Lance Hollander is one of the Bankers YCL Real Estate Consulting Group works with. Please referred to our “Resources” page on YCLRealEstate.com. These programs above can be obtain through all Bankers.