Thinking About a New Home? The Clock is Ticking

By on

If there’s no place like home, there’s also no time like the present. Getting a mortgage will likely become more difficult and expensive next year, MarketWatch says.

For starters, the Federal Housing Finance Agency will reduce the size of mortgages eligible for backing by Fannie Mae and Freddie Mac.

Those limits are now $417,000 in much of the country, and $625,500 in some cities where real estate prices are high. FHFA hasn’t said how much the cap will drop, MarketWatch says, but “lower loan sizes could shut some applicants out.” People who need bigger loans will have to go to private lenders, who want low-risk, affluent borrowers who can make a bigger down payment of 25 percent to 30 percent, it says.

Private lenders may also steer borrowers to an adjustable interest rate, which will get higher over time.

New mortgage rules from the Consumer Financial Protection Bureau also come online next year, which could make it harder for those already in debt to qualify, MarketWatch says:

Some lenders have been offering low-income documentation mortgages and interest-only mortgages to affluent borrowers and holding those loans on their books. The CFPB’s new mortgage rules that kick in next year will offer more protection from lawsuits to lenders who avoid these mortgages. Lenders who want this legal protection also won’t be able to approve borrowers for mortgages if their total monthly debt is over 43 percent of their monthly pretax income.

For all these reasons, and if you can afford it, now is definitely the time to make your move. But don’t be in such a rush that you make a big mortgage mistake you’ll regret later. Check out our video below for advice on what to watch for.

Sign up for our free newsletter

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait? Click here to sign up now.

Check out our hottest deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,109 more deals!

Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • Nunya

    I planned on pre-approving with multiple lenders, but two days after I contacted the first lender, my credit score dropped 9 points because they ran hard-inquiries on my credit. How can I pre-approve and shop multiple lenders without tanking my credit score?