houseforsale1 IMPORTANT:  Blog post modification.  The source (Ohio Association of  Realtors-OAR) for this blog post was inaccurate.  I am sorry for the confusion.  OAR incorrectly stated that new changes will apply to all single family homes.  This is incorrect.  Changes on April 1st will apply only to condominiums and investment properties.  See previous blog post for more information: I am sorry for the confusion.

Wow, this is incredible new (bad) news.  It looks like the only good option for home buyer’s will probably be an FHA loan.  Fannie Mae and Freddie Mac are both toughening their credit score and down-payment rules as of April 1.

In response, major lenders are already factoring in the higher fees, which reduces the effectiveness of the stimulus efforts.

Under the new guidelines:

  • Buyers with down payments of less than 25 percent will be charged a three-quarter point add-on penalty, no matter how high their credit score
  • Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a 1 percent add-on
  • Refinancers who take cash out will be charged as much as three points if they have a low to moderate equity stake.

Freddie spokesman Brad German says the loan categories and credit risk combinations targeted by these fees “default at four-to-eight times” the rate of other mortgages backed by Freddie. “We have to manage these risks appropriately,” he says.*

Good luck out there!

Home Buyer Advocate Mike

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*This blog post referenced “Ohio Association of Realtors” email newsletter.