Fannie Mae has made some changes that may make it easier for you to qualify for a mortgage!
One of the biggest changes is that credit card debt can be paid off and we will not have to use that payment in qualifying! In the past you could pay off a credit card but you had to close the account for us to not use that payment against you. Now you just need to pay it down to a zero balance – that may help you qualify for a home! Even a small credit card balance could be enough to change the amount you qualify for. This definitely helps those that pay off their credit card balances monthly.
Some other changes affect those that are buying a home but not selling their current home right away – or maybe closing on the new home before the current home closes. Currently we needed 6 months of reserves on both homes – that could be a huge dollar amount! Now Fannie Mae does not require the extra reserves. You do need to qualify with both mortgage payments.
Another area that can affect what you qualify for is those with unreimbursed business expenses. If you claim business expenses on your tax returns, as long as that amount is less than 25% of your annual income, we do not have to deduct those expenses any longer. If the amount exceeds 25% of the income, we still need to deduct that amount from your income. This can be typical with commission employees and is usually found on the tax form showing itemized deductions. If you pay union dues, we do not need to deduct those dues from your income – unless you claim more than 25%of your income in unreimbursed business expenses.
For those thinking about refinancing, DU refi plus (HARP loans) have been extended to December 2016. This program was scheduled to end in December 2015.
We are noticing more changes – most of them positive – to make it easier for you to qualify for a new home. If you have been thinking about buying or refinancing and have had problems qualifying in the past few years, you may want to talk to a loan officer again. There may have been some changes that make it easier for you to qualify!