| New Mortgage Rules Put Limits On Residential Real Estate Investors |
| Articles - Mortgage |
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In its last act as a semi-independent company, Fannie Mae altered mortgage guidelines for real estate investors last Friday. It was Fannie's 22nd update this year.
In its last act as a semi-independent company, Fannie Mae altered mortgage guidelines for real estate investors last Friday. It was Fannie's 22nd update this year. There are several parts to the new guidelines. Part one involves number of properties owned by one person. Formerly, one person could own 10 properties. However, now, if a person applies for a mortgage loan, Fannie Mae will not grant the loan for second homes or investment properties if the applicant already has loans on more than 4 properties. This limit can be avoided if the properties have the loans in the name of a corporation, and the property owner is the single owner of the corporation. If the properties are held in such a manner, Fannie Mae won't count them as part of limited properties. Therefore, it might prove beneficial for investors to restructure their properties into a corporation and avoid the 4 property limit. Now, this is a good idea to help gain mortgage approval even though some investors have taken this action for tax and liability reasons. The second part of the guideline change cannot be so easily avoided. Fannie Mae is assessing new, loan-to-value based loan fees on all investment property mortgages. *3.75% loan fee - Loan-to-value 80.01-90.00% *3.00% loan fee - Loan-to-value 75.01-80.00% *1.75% loan fee - Loan -to-value less than 75% These fees, along with other risk fees assessed by Fannie Mae are mandated to be paid by the buyer. The other risk fees are a minimum of % for investors. The government hasn't released any information about possible relaxation of mortgage guidelines since their Fannie Mae/Freddie Mac takeover. If the guidelines loosen up, this would be helpful for real estate investors. If those who want to mortgage property can't qualify for a loan, lower rates aren't going to be a lot of help. Consider incorporating your properties. Also, if you are considering trying to mortgage one or more investment properties, it may smart and and more cost effective for you to buy over the near term DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. If you are in the market to Buy a Home then VisitRob Kosbergs' Detailed FREE Guide on Buying your Dream Home with a Zero Down Mortgage or for up to date Mortgage info visit my Mortgage Blog |