The Fannie Mae and Freddie Mac market is alive and well. That is loans up to $510k and in some high cost counties across the US, up to $765,000. Rates are the lowest in a long time. No changes have been made yet to underwriting guidelines.
Jumbo loans, which are loans above the Fannie and Freddie loan amounts, is starting to tighten. Bank of America has announced That Santa Clara County and Santa Cruz County are declining markets and now require 25% down on any jumbo loan. Wells Fargo has taken their guidelines as well. Now it is 20% down required for any jumbo loan, they will no longer take investment properties, and they are not allowing cash out on a jumbo loan. This is their new guideline for their correspondent lenders.
Many Jumbo investors have stopped their non-QM guidelines. QM refers to Qualified mortgages. This is the governments definition of loans that are more secure than non-QM loans. Non-QM loans have characteristics of greater than a 43% debt to income ratio, allow for vacation rental income to be used to qualify, will allow alternative documentation for qualification.
Rates have gone up on FHA and VA transactions because there are less investors with an appetite for 0 to 3 1/2% down loans. I think the increased interest rate is temporary until the government finds backings on these types of loans for the investors.
Lenders have introduced stimulus package help on monthly mortgage payments, to help borrowers afford their homes during these times. I would contact your loan servicer directly and ask them what is available to you.
FHA loans are seeing lenders raising their FHA requirements. In fact, it seems that many lenders are raising their minimum FICO scores for FHA loans to as high as 660, which would prevent a large section of borrowers from accessing an FHA loan.
Refinances are available and the ones who qualify are getting historically low interest rates. Feel free to contact Ryan, our trusted lender and the author of this article, if refinancing is right for you.
Ryan Buckholdt, Mortgage Consultant