In compiling content for our current series of blogs looking at the prospects for real estate next year, we thought we had all the likely subject matter covered - until earlier this week!
As we approach the holidays, real estate industry news naturally begins to become a little thinner. However, as in so many other ways, 2014 has continued to be a very welcome exception to conventional rules.
This week saw arguably the most significant announcement of the entire year - as from tomorrow Saturday 13th December, Fannie Mae, the leading source of liquidity for housing in America, will start to back mortgages with down payments of as little as 3% of the price of a home.*
This is wonderful news for the Albuquerque area real estate market, providing a big incentive to low income and first time home buyers. It widens the buyer pool to now accommodate people with good credit but low savings. And, unlike the already popular USDA rural housing programs, there are no geographic restrictions.
Successful borrowers will also be required to receive home ownership counseling, as part of the stated goal of achieving a safe, responsible balance between expanded access to mortgage financing and the long-term viability of loans.
The new low down payment loans will only be available to those qualifying individuals buying private mortgage insurance and with a credit score of at least 620. They will also need to provide full documentation of income, assets and job status. The loans will only be applicable for single-family homes used as a primary residence.
This exciting new initiative signals something of a reversal of tighter lending standards that were introduced at the beginning of this year. It will be especially welcome for first time buyers, who have been struggling to own a home since the housing market rebounded.
A Federal Reserve survey published this summer demonstrated that 45% of renters were delaying home purchase because they would struggle to afford a down payment. Now, for those potential home buyers capable of meeting the new program's strict criteria, there is realistic hope of home ownership, without the prospect of having to possibly save for many years to afford a down payment, while house prices will probably continue to rise and make the achievement of this goal even more taxing.
For many home sellers the clear implications are that the pool of potential buyers will grow significantly, making it easier to sell their property.
Quite clearly, this is amazing news to end the year and we would be happy to discuss the incredibly positive implications of the new initiative with you in more detail, related to your individual circumstances. Why not contact us today!
Footnote: We're very pleased to say that the good news doesn't stop there and, in our next blog, we'll be telling you of yet another significant likely market development in 2015 that's sure to bring further cheer!
* Freddie Mac will also be introducing a similar low down payment program called Home Possible Advantage in March.