Looking to upsize - take notice

Posted At : August 5, 2008 1:03 PM
Related Categories: Market update

In an effort to reduce the potential of future foreclosures, Fannie Mae has instituted new guidelines that may hurt some potential home buyers. Effective 7/31/2008, buyers who want to convert their existing residences as investment properties must: 1. Have 30% equity in their existing home based on a current valuation. 2. To count rental income to offset property debt, borrower must have a fully executed rental agreement and receipt of a security deposit from the tenant.

If the above two requirements can not be met, you will need to have 6 months of PITI (princ, interest, taxes, insurance) for both properties as reserves and sufficient income to qualify for both properties.

The lending market is changing so fast it does make your head spin...stay in discussions with your professionals!

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