- Unemployment rates are at a 50-year low
- The stock market hit a historic high
- However, there was a market selloff due to the uncertainty of the coronavirus
- The stock market has entered correction territory since the market dropped over 10%
- A market correction is official once the stock market drops 10% or more
- If the stock market plunges more than 20%, it means the economy is in a Bear Market
- However, this market selloff means that mortgage rates will be plummeting in days and weeks to come
- Home start hit another record for January 2020
- There is nothing wrong with the economy and earnings of major corporations
- The reason for the market correction is due to fears of the coronavirus and the uncertainty facing investors
- The market panics and tanks during periods of uncertainty
- With mortgage rates anticipated to plummet and updated mortgage guidelines, we are expecting a record-breaking 2020 for homebuyers and homeowners
- Fed Chairman Jerome Powell had breaking news today that the Feds is keeping an open mind in dropping rates
- Prior to the announcement by Powell, the Dow Jones Industrial Average was down 1,000 points
- However, with the combination of interest rate cuts by the Fed Chairman and the press release by Vice President Michael Pence, the Dow Jones closed just over 300 points
- This is a far cry from the low of the day of a drop of 1,000 plus points
In this article, we will discuss and cover the Updated Mortgage Guidelines for 2020 for homebuyers and homeowners on purchase and refinance transactions.
In this article, we will discuss and cover the Updated Mortgage Guidelines And Loan Programs For 2020.
Updated Mortgage Guidelines For 2020 On Purchases And Refinance Transactions
Updated Mortgage Guidelines And Loan Programs For 2020 due to the booming economy and hot housing market:
- The major changes with FHA loans are the maximum loan to value on cash-out refinance
- The old rule was 85% LTV on FHA Cash-Out Refinance Mortgages
- The newly updated mortgage guidelines on FHA cash-out refinance loans is a maximum of 85% loan to value
- Mortgage agencies such as HUD, FHFA, the VA, and USDA can change mortgage agency guidelines without notice
- FHA still remains the most popular loan program in the U.S.
- With only a 3.5% down payment required on a home purchase, HUD sets lenient agency mortgage guidelines on FHA loans
- The minimum credit score requirement to qualify for an FHA loan with a 3.5% down payment is 580 FICO
- Borrowers with under a 580 credit score and down to a 500 FICO may qualify for an FHA loan with a 10% down payment
Updated Mortgage Guidelines On Conventional Loans
The Federal Housing Finance Agency often referred to as the FHFA, is the federal agency in charge of raising conforming loan limits. M
2020 Changes On VA Mortgages
VA loans are hands down the best home mortgage program available in the United States. However, not everyone can qualify for VA loans. You need to be a retired and/or active member of the U.S. Military with a valid Certificate of Eligibility (COE).
Lenders offer 100% financing on VA loans with no down payment required by homebuyers. Most borrowers do not have to come up with any closing costs. Closing costs can be covered with either a seller’s concession and/or lender credit. There is no minimum credit score requirement on VA loans. There is no maximum debt to income ratio caps on VA mortgages. Gustan Cho Associates has no lender overlays on VA loans.
Non-QM And Alternative Financing
Gustan Cho Associates offers non-QM mortgages and alternative financing. There is no waiting period requirements after bankruptcy and/or foreclosure. Non-QM Loans allow late payments in the past 12 months. This includes mortgage lates in the past 12 months. 10% to 20% down payment is required. The amount of down payment required is dependent on the borrower’s credit scores, type of property, and how long the bankruptcy and/or housing event has been seasoned. Dale Elenteny of Gustan Cho Associates is a Non-QM lending expert.
February 28, 2020 - 4 min read