It May Be Easier to Get a Mortgage Now


To some, just the thought of procuring a mortgage and all that the process entails is overwhelming. But there’s some good news: A variety of recent changes in the industry have made getting a mortgage less difficult than it once was.

To some, just the thought of procuring a mortgage and all that the process entails is overwhelming. But there’s some good news: A variety of recent changes in the industry have made getting a mortgage less difficult than it once was.Qualifying Assets

In a change from years past, Freddie Mac, a secondary market entity backed by the government, now gives borrowers many more options when it comes to funding requirements.

According to Real Estate Writer for Kiplinger Pat Mertz Esswein, applicants may now include the entirety of retirement-account asset value to meet reserve prerequisites. Previously, that number was maxed out at 70 percent of the account’s value.

“Borrowers can also use vested stock options as a source of funds for reserves, down payments and closing costs,” Esswein adds.

Furthermore, Senior Loan Officer Scott Sheldon wrote in a blog on Credit.com that tax-deductible employee expenses no longer count against your income. This typically affected workers in trades in which the potential homebuyer paid out of pocket for uniforms, equipment, or dues related to his or her job.

“You can have as much employee business expense write-offs as you would like and the lender will still use your full W-2 income, without limitation,” Sheldon explained. “This change now allows you to qualify for more loan than you could have in years past.”

Loan Limits

All of the above should be good news for anyone looking to purchase a house in the near future. In the active housing market of today, it’s always a plus to maximize any advantages you can.For the majority of the country, the limit for government-chartered loans (those from Freddie Mac or Fannie Mae) is $417,000, but in nine metro areas across the nation, that limit has drastically increased. From San Diego to Boston, would-be homebuyers won’t have to resort to “jumbo” loans as hastily as before, with the new conforming-loan ceilings now ranging from $437,000 to $625,500.

First-Time Buyers

If you have parents who are acting as co-borrowers, helping you with the down payment on your first home, you don’t have to ensure that you, the primary borrower, shell out at least 5 percent of that down payment as you once did. You’re all set, Esswein said, as long as the total down payment is more than 20 percent of the purchase price. Moreover, your parents or other co-borrowers can help you shell out the money for closing costs and reserves as well.

Debt Payoff

Once upon a time, if you were told you needed to pay off some debt before you could qualify for a home at a certain price, you would have to pay off the account and close it as well, even if lowering your available credit may have negatively impacted your credit score. Now the double-edged sword is sheathed, as the account no longer has to be closed out for you to qualify.

All of the above should be good news for anyone looking to purchase a house in the near future. In the active housing market of today, it’s always a plus to maximize any advantages you can.

 

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