February 2015 – Cool Tools News Spool

Fannie housing survey shows increasing optimism

Feb 182015

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

The Jan Fannie Mae National Housing survey reveals increasing optimism among US consumers, which may portend a good spring homebuying season. Three results really jumped out at me.

First, 29% of respondents said their income is significantly higher this year, and 48% expect their financial situation to improve in the coming year. Both of these figures are all-time survey highs. Also interesting, the gap between those who expect their situation to improve and those who expect it to stay the same expanded to 9 points.

Second, the share who thinks now is a good time to sell reached a survey high of 44%. Two of the biggest impediments to the housing recovery have been stagnant incomes and lack of housing inventory. These first two survey results may indicate a lessening of these barriers.

Finally, the share who says they would buy if they were going to move jumped 5 points to 66%, and the difference between potential buyers and renters gapped out to 37%. That means more than twice as many folks would buy as rent.

Fannie has been conducting this survey since 2010. The survey highs are exciting, but I’ll caution you that I’ve noticed the responses about personal finances seem to mirror consumer sentiment reports. As such, the numbers are liable to fall again next month. However, I think the sell/hold and buy/rent numbers are affected by many other factors and, thus, may provide more hope for more robust spring homebuying.

Qualifying for mortgage easier with new student loan guidelines

Loan Guidelines, Residential Mortgage Comments Off

Feb 022015

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

Given all the media coverage about student loan debt keeping millennials out of the home purchase market, I thought it would be good to review some updated loan guidelines from Fannie Mae and USDA concerning this type of debt.

One important point to remember is that both loan programs treat deferred student loans the same as loans in active repayment, meaning we have to include the loans in our debt calculations.

Also, the guidelines recognize that income-based and graduated repayment plans, which have become popular, may not provide an accurate estimate of the loan’s impact on the borrower’s finances because the payment may rise. As a result, the guidelines require that we use a fixed percentage of the loan balance in our debt calculations.

On a very positive note, the updated guidelines cut that fixed percentage from 2% to 1% of the loan balance. This is a big deal because it reduces the impact of student loan debt by 50%. Further, if the actual payment is less than the 1% calculation, the guidelines state that we can use that payment, but only if it fully amortizes the loan. If the actual payment is greater than 1%, we must use the actual payment.

While USDA already has implemented the new guidelines, the changes won’t apply to Fannie loans until 4/1.