There have been a couple changes in the mortgage world over the past month. These could easily affect many looking to buy or refinance your home.
FHA announced that effective with all case numbers ordered on September 1, 2019, the maximum loan to value for cash out refinances will be 80%. Up until that point, you could go to 85% on a cash out refinance. That allowed many homeowners a little more equity if they needed to do a cash out refi. Conventional loans are also capped at 80% for a cash out refi.
Fannie Mae announced that they were changing the income limits for their Home Ready program. This program allowed those that were at 100% of the median income to get a lower interest rate and lower mortgage insurance. Now they are capping the income limit at 80% of the area median income. For the Minneapolis/St Paul metro area, that will cap income at $79,440 for this program. If your income is over this number, you are no longer eligible for the program.
Freddie Mac announced that they were going to lower income also – they waited a couple weeks, but it is now effective for the Home Possible program. The income limit is the same as Fannie Mae.
Minnesota Housing and Dakota County are reviewing their programs and will continue to have higher income limits but may be changing some of the conventional loans they offer. We will know more in the next couple weeks. This may affect the mortgage insurance rates but we aren’t sure yet.
For anyone looking to buy, if you have already been pre-approved with a lender, you may want to make sure this doesn’t affect your mortgage approval. If you were using these programs and your income is over the limit, you will need to change the program you are using. If you are a first time homebuyer, you can still buy at 3% down, but will now have a slightly higher interest rate and mortgage insurance. If you were approved with these programs and are not a first time homebuyer, you will need to put at least 5% down or switch to FHA financing.
Make sure you connect with your lender or call me with questions. I would be happy to answer any questions you may have! Interest rates are great, so if you are looking to buy, it’s still a great time!!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
