In mid-November, both Fannie Mae and Freddie Mac made homebuying ridiculously less expensive for many, if not most first-time homebuyers!
And – I was remiss for not blogging about it sooner.
13 Factors That Impact Your Interest Rate!
I often blog about the 13 Factors that impact someone’s mortgage rate – reminding readers that there is no “one interest rate” for every borrower, and that rates can vary by as much as 2% from borrower to borrower. This is because factors like property type (Condo vs. SFR), credit score, down payment % and even loan amount can significantly impact someone’s interest rate.
BUT – Fannie and Freddie are currently IGNORING many of those factors for a lot of first-time homebuyers.
And that in turn can give first-time homebuyers an interest rate that is as much as 1% lower than it would otherwise be.
Qualifications for These Lower Rates
- First-Time Homebuyer: Someone who has not bought a home in 3 years.
- Area Median Income (AMI): Income must be less than AMI in low-cost areas (most of TX for example), and less than 120% of AMI for high-cost areas (the SF Bay Area). AMI is almost $100,000 for much of Texas and 120% of AMI is over $180,000 for the Bay Area – so this limitation is not that restrictive. HERE is Fannie’s AMI lookup tool.
- Purchase Only: Loan cannot be a refinance.
- Primary Residence Only: No investment properties or 2nd homes.
Am I Overhyping This?
Not even close. For example, if a first-time homebuyer purchases an $800,000 condo in the Bay Area with 5% down and a 680-credit score, her rate would be as much as 1% LOWER now because of this program. Normally, the 680 score, the small down payment %, and the condo would all result in interest rate increases. But those increases are ignored with this new program.
Why Is Fannie Offering This and Will It Last?
Fannie and Freddie are offering this program as a legitimate way to help first-time buyers in a higher rate environment, and as a way to help keep the housing market healthy.
It is much like the programs that were offered for buyers after the 2008 meltdown – and NONE of them lasted.
This program too will likely disappear sooner rather than later (likely when the spring buying season heats up).
So, agents and lenders alike might be wise to market this aggressively now. And – they might even blog about it. 😊
