New Fannie Mae Loan Guidelines

OK, so you found your dream home and you have 20% of the purchase price to put down, plus you dont need any seller contribution for closing as you also have that money set aside. Your dream home is listed under market value and will easily appraise, it isnt a short sale and it isnt a foreclosure; just an old fashioned GOOD DEAL. This should be a breeze, you simply apply for a loan and wait for your approval and then go to the closing table.  Oh, wait a minute may not be exactly that simple.

The new Fannie mae loan guidelines may affect you.  Effective today (December 15, 2009) you credit score will play a much bigger roll that in the past.  Effective immediately the new required credit score needs to be at a minimum of 620; this is a drastic increase in credit requirement from the previous 580 score requirement. In addition to the stricter credit requirement Fannie Mae is also concerned with you current obligations. In other words, a maximum of 45% of your income can go toward current debt or obligations.  These obligations would include debts such as car payments, credit cards payments, and other loans.  Add to this that fact that if you are purchasing a condo there will be a condo questionaire which will depict condo maintenance dues delinquecy rates and forclosure rates in the building; this will also be taken into consideration when the lender is evaluating the risk involved with your loan.

It is expected that most banks will adopt the new higher standards imposed by Fannie Mae; considering that Fannie Mae buys loans from lenders inturn providing needed financing to these institutions.

If you are in the market to buy a home some good steps to take are: lowering currect debt, do not open additional accounts, and do not make any other major purchases (ie, a vehicle).

Also, it is a great idea to keep an eye on your credit score.  One good website to use is annualcreditreport.com , there is a small fee associated witht the complete report, but if you are in the market for a purchase it is well worth it.

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