Hope you're having a wonderful holiday season.
As we move into next year, I wanted to take a moment to talk a little about the significant loan changes coming in 2014 that will impact the real estate market.
First; as of January 1st, FHA has lowered the insurable amount for all loan products in Riverside County.
The maximum allowable loan now using FHA will be $355,350. This is a significant drop from the $500,000 allowable until the end of 2013.
There are hundreds of homes in our area, including new construction available for sale in the 355-500K price range and an FHA loan with the low, 3.5% down payment will no longer be an option. To qualify in this price range now, most buyers will have to use a conventional mortgage. A conventional mortgage will require a higher down payment and a much lower debt to income ratio (43%) than FHA; however, will generally have a lower mortgage insurance premium.
The other significant change will involve the qualified mortgage rules (QM14) all lenders must begin using to qualify loan applicants in January 2014.
These new qualifications will have a maximum allowable debt to income ratio of 43% as well. It is currently set at 55% so this drop will also have a significant effect on potential buyers next year.
These are only a few of the many lending changes coming that will greatly effect buyers next year.
You can still get a conventional loan
with a 5% down; however, the new DTI (debt to income ratio) will still come into play while getting qualified.
Having all this in mind if you would like to discuss these changes in detail please contact me so we can put you on the right path to purchase next year or even still get you qualified before this year runs out.
We look forward to hearing from you and assisting you with your home purchase.