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Specialty loans help repeat buyers make the move

WASHINGTON – Dec. 18, 2015 – The percentage of repeat homebuyers fell 40 percent between 2002 and 2014, according to mortgage financing giant Fannie Mae research.
Why the drastic drop? Jude Landis, vice president of single-family credit policy at Fannie Mae, speculates that for homeowners eligible to buy another home could have low equity in their existing home – equity so low that it prevents them from moving.
Landis urges lenders to promote several loan products offered by Fannie Mae that could help these creditworthy homeowners who are “locked in” by insufficient equity to move.
For example, HomeStyle Renovation is a product that allows homeowners to finance updates such as a kitchen renovation, a bedroom addition or modifications for aging in place.
Landis says that earlier this year Fannie Mae also updated its Selling Guide policy to make it easier for borrowers to finance a new home while converting their previous home into a rental property. The update includes ways underwriters can include rental income in the debt-to-income calculation.
HomeReady is a new program, Landis says, that expands the eligibility to low and moderate-income creditworthy borrowers to finance homes in designated low-income, minority, and disaster-impacted areas. The product offers low downpayment financing – up to 97 percent for the purchase of a one-unit property and up to 95 percent for a limited cash-out refinance.
HomeReady also includes a feature for extended family households that allows lenders to consider income from a non-borrower household member as a compensating factor in figuring the debt-to-income ratio. It also allows consideration of rental income from an accessory dwelling unit, such as a basement apartment.
Source: “Serving Creditworthy Borrowers in Today’s Market,” Fannie Mae Commentary (Dec. 3, 2015) and “Fannie Touts Benefits of Recent Guideline Changes,” Mortgage News Daily (Dec. 4, 2015)
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Source: Florida Realtors Feed

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