2017 Mortgage Rules are Different: How the Fannie Mae Rules Will Affect You

2 minutes

Fannie Mae is one of the two organizations that back about half of the mortgages in the US. As such, the changes made in these organizations between late 2016 and early 2017, will very likely affect your 2017 mortgages applications and refinances.

There are some instances where property appraisal may not be needed when refinancing a loan. A lender will simply issue you with a Property Inspection Waiver.

Appraisal Information regarding millions of properties is already in the Fannie Mae’s Desktop Underwriter Software. Therefore, this is the data that will be used by the software to assess whether your home’s value is acceptable or not.

2017 Mortgage Loan Limits are Higher

The new mortgage rules by Fannie Mae allow homebuyers to get mortgages with much lower interest rates than before. The Federal Housing Finance Agency raised the standard loan limits due to rising property values. The mortgage loan limits have in turn gone up from $417,000 to $424,000.

This rule applies to most States in the US. However, in other areas deemed to be “high-cost areas” the limit set by FHFA is at 115% of the local median home value.

Cases Where a Loan Could Be Declined

The Fannie Mae mortgage rules have made changes effective as of December 2016. The following are areas in which mortgages won’t be approved in 2017:

  • Environmentally sensitive areas
  • Areas where setback laws apply

If the law forbids you from rebuilding a damaged home, then you cannot get a refinancing loan.

The Situation of the HARP Program

The Home Affordable Refinance Program, also known as HARP, is a program that was introduced to allow borrowers eligible for Fannie Mae loans to refinance their loans. This was possible even if the loan value exceeded the property value.

This program will be replaced by another refinance program in October 2017. There are fewer restrictions than the former program which comes as a sweet relief to homeowners.

Moreover, the latest software edition of Fannie Mae allows for automatic verification of applicant’s information. This could mean a faster and cheaper purchase and refinancing of mortgages.

How The new Mortgage Rules will Affect Student Loan Borrowers

A recent survey revealed that student loans are one reason student borrowers have delayed buying a home. However, that could soon change. The changes put in place now make it easier for student loan borrowers to qualify for mortgages.

Two of the 3 significant changes announced by Fannie Mae can help consumers with student loans obtain mortgages while the last change is a good option for those with home equity to reduce student loan debt.

Borrowers can now use one of the several income-driven plans that pay off the loan in full during the term. Examples of such plans include consolidated, extended and graduated repayment plans. Other changes include:

  • Third-party payers: the new mortgage rules allow mortgage lenders to exclude student loan repayments from the mortgage calculations as long there is a documented proof of payments by a third party, such as an employer or a parent.
  • Paying student loans with home equity: the new Fannie Mae 2017 rules will allow borrowers with enough equity in their homes to use some of their funds to repay some of their student loans. This applies to most federal student loans.

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