New laws and loan processes are making it easier to buy a home
The real estate market has been a rollercoaster for home buyers since the pandemic started. Mortgage rates dropped to record lows (down), the number of houses on the market also tanked (down), and homes started selling in record time for record-high prices (up). What a carnival ride!
Some home buyers have thrown in the towel searching for their dream home. It has definitely been a sellers’ market. Yet as competitive as the market has been, changes to the loan process and new laws are making it easier for some Americans to buy homes.
I know what you’re thinking: it doesn’t feel that way! Take a look at these changes that have boosted your opportunity to become a homeowner and make the move you’ve been dreaming of.
Prop 19 Property Tax Changes
One of the big advantages of staying in a home for decades is having a low property tax rate. If the home doesn’t meet your needs any more, you can feel stuck. Moving could mean a shock to your finances with a higher tax rate—especially if you’re on a fixed income.
That is until Prop 19 passed in California this year. Now seniors, people with severe disabilities, and victims of wildfire have the option to transfer their current property tax rate anywhere in the state! And there’s no cap on the value of the new home.
Homeowners who qualify can now buy a new home anywhere in the state, for any price, while transferring the current tax rate up to the value of their old home up to three times. Learn more here: (Insert prop 19 link)
Rental History Consideration
Got some dings on your credit report? Are you afraid your credit is holding you back from qualifying for a mortgage? I have good news for you.
Fannie Mae is now considering rental payment history when underwriting loans for buyers. This means potential homebuyers with insufficient credit will have a better chance of getting approved for a mortgage.
Factoring in Accurate Student Loan Debt
Are you renting and feel like paying a mortgage in combination with your student loans is impossible? The Federal Housing Administration (FHA) is taking steps to make it easier for borrowers with student loan debt to qualify for a federally insured mortgage.
With a new policy in place, lenders now calculate a borrower’s student loan month payment based on the actual student loan payment, which is often lower than previous calculations.
What does this mean for hopeful homeowners? More people will be able to meet the minimum eligibility requirements for an FHA-insured mortgage.
40 Year Mortgage Option
For Americans struggling during the pandemic, mortgage forbearance was a saving grace. But what happens when payments resume? One option being considered right now is allowing homeowners to catch up on payments by refinancing with a 40-year mortgage.
As home prices and mortgage rates climb, a 40-year mortgage could also help combat the affordability problem with lower payments for new homeowners.
Are you ready to explore some of these options for buying or selling? Contact me anytime with questions.
–Melissa
