Fannie Mae originated back in 1938. Fannie Mae operates in the secondary mortgage market buying mortgages from lending companies. With our real estate market experiencing a colossal correction due to the sub-prime disaster, lending guidelines continue to change...and, rightfully so.
As a buyer, you are empowered when you have knowledge. A recent change made by Fannie Mae will effect how you or your agent negotiate your offer. If not done correctly, you may end up on the short end of the stick when it comes to securing your loan thereby possibly ending up with no loan or house.
Fannie Mae has announced a recent change regarding seller concessions. Previously some sellers, builders and/or developers would be willing to prepay, on behalf of the buyer, the HOA fees and/or assessment fees. In some instances, the builder and/or developer (sometimes the seller) would be willing to abate the mortgage payments on behalf of the buyer. No more! Fannie Mae will no longer purchase loans from mortgage institutions with these conditions. Additionally, seller concessions such as decorating allowances, furniture etc. will effect the loan amount the lender is willing to provide. For instance, when calculating loan to value ratios to determine loan amount IF sales concessions such as a decorating allowance is part of the agreement, this amount will be deducted from the sales price or appraised value, whichever is less. End result? It will reduce the amount available to loan on the house.
What hasn't changed is the finance concession surrounding the contribution towards closing costs and prepaids by the seller. These concessions will still be allowed. So, when you get ready to buy a house be sure to ask questions of your mortgage lender and be sure you understand the guidelines. Equally important, your realtor needs to be informed and know the guidelines as well. Since he/she is in the forefront of the process, if they have negotiated allowances similar to what has been mentioned above, you may find yourself in a complicated situation in securing a loan. Be an informed consumer!
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Janice,
You have many great articles and insights for sellers and buyers of Suwanee real estate. I am sure this is going to help your business.