Issaquah Mortgage Expenses Increasing in 2014

financing Issaquah Mortgage Expenses Increasing in 2014Head’s Up - Waiting to purchase a new home may cost you more in 2014!

Issaquah home buyers that take out a mortgage can expect to pay more to get a mortgage next year.

This is the result of changes in the mortgage market to reduce the roles of the mortgage giants, Fannie Mae and Freddie Mac.

Mortgage Guarantors Fannie Mae and Freddie Mac

Both Fannie Mae and Freddie Mac are currently under the regulation of a Federal Government regulator. The regulator was placed over both entities as the result of the 2007-2008 financial downturn. The regulator announced that sometime in early 2014, that they will charge higher fees on loans to borrowers who don't make large down payments or don't have high credit scores. These types of fees are most often passed along to the homebuyer; and many buyers, including those seeking a mortgage in Issaquah, will be impacted by these changes.

Fannie Mae and Freddie Mac do not make mortgages directly, however, they do guarantee and purchase back almost 70% of all of those mortgages made. The changes to the mortgage market is an attempt to make it more expensive for home buyers who obtain mortgages through Fannie and Freddie -- to make them more equal in cost to private mortgage makers. Private providers of capital, who (before the housing crash of 2008) provided the majority of home mortgages, are mostly out of the real estate market now.

Real Estate Industry Objections

The Federal regulator, Mr. Watt, will face fierce and heavy objections by consumer groups and the real estate industry. It is the position of those groups that the housing market, while doing much better, is still recovering and does not need additional fees or costs placed on potential Issaquah home purchasers.

Mortgage Increase Examples

Both Fannie Mae and Freddie Mac placed examples on how the fee increases would impact homebuyers. Fees will increase for many borrowers who do not have a down payment of at least 20% and FICO credit scores of 680 to 760.

For example, a home buyer looking for a 30-year fixed-rate mortgage, who has a credit score of 735 and makes a 10% down payment, would pay fees of totaling 2% of the loan amount, up from 0.75% now. The 2% upfront fee could raise the mortgage rate by around 0.4 percentage points. Borrowers with larger down payments could also be affected. Fees for a loan with a 690 credit score and a 25% down payment would rise to 2.25% from 1.5%.

With Issaquah area home prices continuing to increase, and interest rates likely to rise as well, these added expenses will likely make buying a home more challenging for the average home buyer.

Plan Ahead - Seek an Issaquah Mortgage Lender Today!

For more information about the how these changes could impact you as a home buyer, be sure to consult with a professional, qualified mortgage broker before seriously looking for a new home - they can help you plan your next home purchase months in advance, possibly saving you money, and making the home buying experience more seamless. We have several local Issaquah mortgage lenders we could highly recommend!

About

Danny Evatt, REALTOR® is a Real Estate Agent with Coldwell Banker Danforth, serving the communities of Issaquah, Sammamish, Snoqualmie, North Bend & Fall City.

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