The Noose is getting tighter

As of December 12, 2009 Fannie Mae will be implementing its new version of DO.This new version will update its risk credit assessments. The key component is the maximum allowable debt ratio will be going to 45 %. The debt ratio takes in consideration your housing and all other monthly obligations. There may be some flexibility to 50 % but only with strong compensating factors. An example would be large reserves (savings) after closing.

Credit requirement are more critical than ever with a minimum score of 620 on all Fannie Mae transactions. Some lenders have moved their minimum required score to 640 on their FHA loans. It’s only a matter of time before all will follow suit with the increase of number of FHA defaults.

In the past two year we have a see a tremendous tightening of lender guidelines, along with a decreasing number of mortgage products.

Noose get tighter for New Jerseey first time home buyers

Cautious lenders, higher credit scores, larger down payments and lower debt to income ratios will all play an important role in the coming year for our New Jersey First time home buyer.

The extension of the tax credit, government buying Mortgage Back Securities, low home prices and affordable New Jersey mortgage rates have been the catalyst for 2009 and should continue thought at least the first quarter of 2010.  But be ware, mortgage requirements are tightening.