Mortgage Lending Programs Help Home Buyers in 2015
January 29, 2015
House hunters are out in full force as 2015 ushers in some changes to home buying rules. The mortgage industry will help boost home sales this year by assisting home owners in taking advantage of programs to get more families into new homes. After the housing crash, strict lending and credit restrictions were imposed on the Federal Housing Finance Agency in order to stem the tide of loan defaults. Down payments for federally backed loans were set at 5% until an announcement in October when Mel Watt, the director of the Federal Housing Finance Agency, discussed his agency's desire to see some of the restrictions put in place by the Dodd-Frank financial reform law to be eased in the wake of a strengthening economy. Now Fannie Mae and Freddie Mac will be able to back loans with down payment as low as 3% for new home buyers with strong credit. During the housing crisis only FHA loans were available with this low down payment. But now the FHFA will be able to offer lower rate loans at equal down payments currently available through FHA loans. This will in essence provide more loan options to cash strapped lower and middle class Americans. Another program out there is the Wealth Building Home Loan WBHL. The Neighborhood Assistance Corporation of America NACA announced in September a new approach to assist low-and-moderate income home finance. "This will be a game changer for generating wealth by making a 15-year mortgage affordable for working people." said Bruce Marks, CEO of NACA. "The majority of the mortgage payment will now go to the equity in the home effectively providing debt free home ownership." The WBHL will provide opportunities to a wide range of homebuyers. Some lenders are also loosening their credit requirements and again are granting loans to consumers with less than stellar credit. At the height of the market crash, it was difficult, if not impossible, to receive a loan if your credit scores were below 700. Now we are seeing a resurgence of loan availability to middle-range credit scores. All of this is good news for the house hunters arming themselves with knowledge as they head out to find the home of their dreams.