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97% Loans Going Away in November 2013

Wednesday Oct 23, 2013
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In less than a month, Fannie Mae is implementing a new mortgage guideline that requires a larger minimum down payment. Come November 16th, the maximum LTV ratio for purchase loans by Fannie Mae will fall from 97% to 95%. In other words, you’ll need to come up with a 5% down payment if you want to go the conventional route.

Currently Fannie Mae only requires 3% down. This is a big deal as borrowers who wish to put the smallest amount down possible will now have to utilize the FHA 3.5% down program.

The difference between a conventional loan with Mortgage Insurance and an FHA loan with mortgage insurance is the fact that MI can be cancelled on a conventional loan when the loan reaches less than 80% loan to value but the MI on an FHA loan stays for the life of the loan. Also an FHA loan requires a one-time up front mortgage premium of 1.75% of the loan amount. The FHA loan of today is much more expensive for borrowers than in years past. I encourage borrowers who are considering the 3% down payment option from Fannie Mae to move on it before the November 15th deadline. Loans must be registered and locked by November 15th but can be closed after that date. Remember, the VA offers 0 down for veterans up to $417,000.

Here’s a quick look at what rates are doing: on conventional loans the 30 year is right about 4.25% and the 15 year is about 3.375%. FHA and VA rates are about 3.75% for a 30 year and a 15 year is right about 3.25%. Rates are headed in the right direction, so anybody that has been waiting for rates to drop again, now is the time to take another look.

Indigo Mortgage is a locally owned and operated company, serving homebuyers in Albuquerque, Rio Rancho, Santa Fe and all across New Mexico. For questions about selecting a mortgage lender, contact Indigo Mortgage in Albuquerque at (505) 836-5700. Indigo Mortgage offers five mortgage divisions including Residential, VA Loans, Reverse Mortgages, Construction and Commercial. They are licensed by the Nationwide Mortgage Licensing System (NMLS #188348), and can provide loans anywhere in New Mexico.

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