Conventional Loans now have a
new change that will reduce your interest rate by up to 1.75%. So if your interest rate right now is
something like 7.5%, you could very likely see that go to 6.5% or even lower. This is a huge change for first-time
home buyers who have been feeling the pressure of high home prices
and high interest rates that are making homes more unaffordable. And you can get access to this
program starting December 1st to help reduce your mortgage payment
and save thousands in interest over the time that you have your loan. So I'll show you how to take
advantage of this in this video. So how does this work and how can
you get access to this program? This program change was introduced
by a government body that makes the rules for conventional loans. See, normally conventional loans,
how it's called Risk-Based Pricing. Risk-Based Pricing looks at your
credit score and down payment and increases your interest rate
based on how risky your loan is. So before I show you the hidden
Risk-Based Pricing Chart, if you're looking to stay up to date on new
program changes like this, consider subscribing and liking this video.
And if you'd like a free mortgage
quote, my team of helpful loan officers. Would love to help you simply
go to WinTheHouseYouLove.com. So this is the hidden
risk-based pricing chart. This is Fannie Mae's Loan
Level Price Adjustment Chart. Now, don't be too
overwhelmed by this here. Basically what happens is a mortgage
lender is going to look at your credit score along with your down
payment to see what kind of fee is going to be added to a loan.
If you're familiar with discount
points, it's very similar to that. Now, there's lots of
different percentages here. These don't actually equate to
your interest rate percentage. These equate to the upfront fees
that you would pay on your mortgage and what most lenders do, instead of
having you pay the fee, they actually just increase your interest rate. So, for instance, we can see that
all the way here on the bottom. That's 3.25% in fees added to the
loan, and instead of charging you that fee, the lender is then going
to increase your interest rate. So for most first time home
buyers, all of these fees are cut. So I made this chart here that explains
this a little bit easier to look at. So it took all the numbers that you
just saw and then showed what it might look like in the interest rate
reduction that you're going to get. So for instance, if you have a 740
credit score and you're putting 3% down, you're likely going to see a reduction
of around a half percent in interest. So if you were getting quoted a 7%
interest rate, you likely will be quoted a 6.5% interest rate once this takes effect.
Okay? We can also look across the chart here. If you're looking at 15% down with a 640
credit score, you're likely going to see close to a 1.63% interest rate reduction. Okay? So you can look through this chart
here to see all these changes here. That you could possibly see
with your interest rate. So then how do you qualify for this? So there are two main programs
that qualify for this loan, and these are gonna be available
to all lenders in the US, okay? This is not something special
that you have to get, and it doesn't cost any money to you.
So this is primarily available through a
HomeReady or Home Possible conventional loan, or a standard conventional loan. HomeReady and Home Possible are available
through most lenders, but they do require, or they have an income limit, and it's the
maximum of 80% of the area median income. Now, this is very easy to look up. I have a link in the description for
you that will allow you to see this. Okay, so for instance, what I can
do is go in here into the Fannie Mae Area Median Income Lookup,
and I can search maybe Dayton, OH. So right here I can see it
says HomeReady Income Limit.
So for the HomeReady or Home Possible
loans, I would need to make $67,280 or less per year to be able to
qualify for this loan and also qualify for the interest rate reduction. Okay, Now if we get a standard
conventional loan, and just a side note, both of these allow 3% down. Okay? So that is an option
with both of these loans. Either a maximum of a hundred percent Area
Median Income or 120% in high cost areas. So we can do the same
thing here on this chart.
So if we were going with a standard
conventional loan and we wanted to get this interest rate savings, we would
need to make $184,100 per year or less. Or if we're in a high cost area,
so let's say we're looking in n. It could be 120% of
the Area Median Income. So what we can do is
take 95, 600 times 1.2. So we would need to make $114,720
per year or less to be able to qualify for this type of loan. Okay. And to be able to qualify for
the interest rate reduction. Normally on a standard conventional
loan, you do not have these income limits, but to qualify for this
interest rate reduction, you do need to qualify for the income limit.
And you also do need to be
a first time home buyer. And a first time home buyer is someone
who has not been onto the title to a home in the past three years. So you may have purchased a home and
then sold it a few years ago, but as long as you haven't been on title
to a home in the past three years, you will qualify for this program. Now, couple notes here. This is only for new loans, new
purchase primary residence loans, okay? It does not work retroactively.
If you bought a home a month ago or
a year ago, I'm sorry, this is not. Qualify and it does
not work on refinances. Okay. It is not retroactive. Also, this is not a program that's been
paid or it's being paid by taxpayers. A lot of programs that have been
introduced recently that are bills and people are trying to
get pass through Congress usually are funded by the government. This is not the case. What's happening is FHFA. Which is that government body who
makes rules about conventional loans. They're just reducing the fees for future
purchase loans for first time home buyers. So this is not paid by anybody. There's no fund for this. It's not gonna run outta money. This is the change that they made here. It's just a reduction. It's not paid by somebody else. And this is automatically
available to all lenders. Some lenders are honoring this
change before December 1st. But all lenders will
have this automatically.
Some of them will probably have
it without even knowing about it when December 1st rolls around. So, here's what to do next. Go ahead and look up if
your income qualifies. Again, I have that link in the
description to look up your income, see if you're in the ballpark range to
move forward with a program like this. If you need help with the math,
feel free to reach out to me. I'll put my email in
the description as well. Also, go to WinTheHouseYouLove.com
and get pre-approved. I have a team of help loan officers
who would love to help you through this program, and qualify for a lower
interest rate, or even if you're not able to qualify for this program.
If you just have questions or
wanna get the ball rolling with a free, no obligation quote,
we would love to help you out..
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