Change is Coming To Next Year’s Mortgage Landscape

There are new factors in the Buyer’s ability to purchase in 2014.
The Federal Housing Administration (FHA), the government’s insurer of home loans, just announced it would be lowering its loan limit in the very highest cost areas from $729,750 to $625,000, starting Jan. 1, 2014.
The FHA has already raised premiums and fees, and the average credit score of its borrowers is far higher than it was during the housing boom.
Then late on Monday 12/9/2013, the Federal Housing Finance Agency (FHFA), overseer of Fannie Mae and Freddie Mac , announced it would again raise the fees it charges lenders, beginning in March. Those fees will likely be passed on to borrowers in higher rates.
“The new pricing continues the gradual progression towards more market-based prices, closer to the pricing one might expect to see if mortgage credit risk was borne solely by private capital,” stated Ed DeMarco, the FHFA’s acting director, in a release. “These changes should encourage further return of private capital to the mortgage market.”
A major new regulation, called the Qualified Mortgage (QM), also goes into effect in the new year, and that could raise borrowing costs even more, especially for borrowers who don’t qualify for the new standards. Qualified Mortgages are designed to protect both borrowers and lenders by limiting risk and providing banks with legal protections. The rules, however, are strict, and while lending can take place outside of QM, it will do so at a far higher cost.

Posted on December 12, 2013 at 10:09 am
Nancy Low | Category: Buyers, News, Sellers

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