Thinking About a New Home? The Clock is Ticking

Thinking About a New Home? The Clock is Ticking Photo (cc) by Images_of_Money

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.

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