Mortgage approvals are going to get a little more difficult again!! Fannie Mae is updating several underwriting policies and we will expect Freddie Mac to do the same.
Here are some updates that are effective September 1st, although most lenders will implement them in August.
-Until now credit reports, income documentation and asset documentation could be up to 120 days old, now it will be 90. If you are closing and your credit report is over 90 days old, we will have to pull a new credit report. That could affect your interest rate and whether or not you qualify for the loan.
-IRS 4506T – Lenders must compare Federal Income tax forms from the IRS with the income documentation that is supplied by the borrower. Previously it was up the lender to decide if they wanted to review the documentation.
-Tip income must be verified to use it in qualifying.
-Trailing Secondary Wage Earner Income – this is now prohibited. In the past if a borrower was transferred, we were able to use projected income for the spouse based on past earnings – not any more.
-Stocks, bonds and retirement accounts – in the past we have been able to use 100% of stocks, bonds and mutual funds, now it will be limited to 70%. Retirement accounts are now going to be limited to 60% of the vested balance (previously it was 70%).
Duplex (two unit homes) – this is a big change! In the past if the home was owner occupied, you could purchase with 5% down, now it will be 20% down with a minimum credit score 640! If the property is an investment property, the minimum down payment required is 25% and a 660 credit score.
These changes do not affect FHA, VA or rural development loans and at this time Freddie Mac has not implemented these changes. However many lenders follow both Fannie Mae and Freddie Mac guidelines and they may automatically make these changes for all conventional loans.
Leslie Vanderwerf, Advisors Mortgage - lvanderwerf@advisorsmtg.com – Website
Really this is good news for me.thanks for sharing