- EFFECTIVE OCTOBER 17TH, ANY ONE BUYING A NEW PROPERTY WITH LESS THAN 20% DOWN MUST QUALIFY BASED ON THE POSTED RATE (4.64%)
- THIS CAN MEAN THE DIFFERENCE IN $150,000 OR MORE FOR SOME BUYERS IN BUYING POWER
1) If a client has an approval in place (firm excepted offer) prior to October 17th, they can close up to 120 days later.. the rules are grandfathered.
2) If your client has an insured pre approval now, they will have to get a new one after October 17th. This is very important, especially if anyone is considering waiving the financing condition.
3) This rule change does not effect clients with at least 20% down payment (yet, but this could change as well) - we will see... fingers crossed it does not.
What this means in real numbers... if a client is looking to buy a property with less than 20% down, their budget has dropped by 20 to 25% on average. This is very unfortunate for first time home buys especially.
To see some examples of the impact:
Client before October 17th (buyer with 10% down)
- their budget to buy - $400,000 purchase price
After October 17th
- their budget goes down to - $300,000 purchase price.
This is drastic, but true.