Mortgage Rules Eased Again

Happy Friday Again!  Mortgage rules easing again! Debt to Income (DTI) Ratios expanding.

July 29th, this rule takes affect for Fannie Mae.  Freddie Mac and Fannie Mae more recently have allowed this case by case with enough compensating factors, but often loans would not receive that enviable “approve/eligible” finding.  Now, it appears we will see many more approvals possible.  Often there is income in a family that can not be counted according to the rules, cash, short term bonuses, short term overtime, 2nd job that does not have two years history or other famiy member income where they are not going on the loan, etc.  So this can make a lot of sense after a 2nd look.  🙂

The maximum allowable debt-to-income ratio (DTI) in DU will be adjusted in DU Version 10.1. Under the adjustment, DU will consider applications with a maximum DTI of 50%. For DTIs above 45% and up to 50%, DU will no longer require certain additional compensating factors. 

All the best on this great Friday!

Don

Mortgage Rules Eased

Refinancing with Cash Out to Pay Off Student Loans

Formerly paying off debt, including Edu loans or Equity Lines of Credit, etc. via refinancing your home and using some of your equity was considered a “cash out” transaction and depending on the amount of remaining equity and credit score, increased your interest rate and/or your costs of the loan.  Recently Fannie Mae issued a bulletin that they would no longer consider paying off a “student loan” a “cash out” transaction.  This is huge.  I am not holding my breath on Equity Lines of Credit receiving the same treatment, but at least the fox guarding the student loan hen house has provided some respite.  If you have a client or family member buried in student loans, please call me right away to discuss.  Like many rule changes, they have a tendency to change the other direction as soon as the markets change again. [Read more…]