So while Sharlene was getting the website updated, Fannie Mae made some nice changes!! These changes will help those with student loans or debts paid by other people – which could help you qualify for a new home easier!
Fannie Mae finally will let us use the payment on the credit report for student loans. That is huge because in the past we needed to use 1% of the balance or the actual fully amortizing payment. Both those numbers typically made it harder for most to qualify for a home. Also many people have an income based payment which is much lower than the 1%. Â However, if the credit report does not give a payment, we still need to use 1% of the balance as a payment. Â This now matches Freddie Mac – they have been allowing this for some time. Â FHA still requires us to use 1% of the balance or a fully amortizing payment.
Fannie Mae also simplified requirements for excluding non-mortgage debt. Â If you can show 12 months of cancelled checks (or bank statements) to prove that another individual has made the payments on time, we no longer need to use that debt against you in qualifying. Â The best example would be a parent that agreed to pay for your student loans but the loans are in your name. Until now, we still had to use the payment against you, now if we can show 12 months ontime payments by a parent (or another party), we don’t have to use the payment when calculating your debt to income. Â I just had a client that this would have helped – the announcement came out just after he closed! One note – this does not apply if the other party is an interested party in the transaction – such as the seller or realtor.
There are a couple changes coming the end of July that may help some people also – there will be changes to the automated underwriting system that may allow more people to only need one year of taxes if you are self employed. That could definitely help those whose income has increased in the last year! Â Also there may be a better chance to get an approval if you are between 45-50% debt to income. More to come on that in the coming months!
All these changes should make it easier for people to qualify for a mortgage and with rates still low, it’s a great time to look for a new home!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc, An Equal Housing Lender, NMLS#150953 – Email – Website
