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Home Ownership is Getting Easier

When I speak with people about how to buy a house one of their first concerns is about the downpayment. When homes in Alameda County have an average price exceeding $800,000 (Oakland is averaging under $500,000) a downpayment of 20% or even 10% can seem totally out of reach. How do you save $80k-$160k for a downpayment (and an additional 2-3% for closing costs)? It can be a daunting thought that can make the most astute savers' knees wobble. Well, Fannie Mae, the government department which essentially sets the rules for lending by commercial banks and lenders, is loosening up the pursestrings a bit.

For some time now unless a buyer got an FHA loan the minimum downpayment was 10% of the purchase price. However, as of December 12, 2015 that minimum is being reduced to 5% for conforming high balance loans (loan amounts up to $625,500 in high cost areas like ours). This is great news for people who can afford the costs of being a homeowner but have trouble saving 10% or more for the downpayment.

For buyers currently in the market who have been planning on putting down 10%, they now have more purchasing power. Now with just over $30,000 you can buy a home around $650k instead of $300k -- that's a pretty sizable difference in the type of home and neighborhood you can afford! If you're in this kind of situation remember to run the numbers to see how an increased purchase price will affect your monthly payments.

This is fantastic news for so many people and will allow more people to realize the security and comfort of homeownership. It may even translate to more inventory as it could also provide sellers with more options for where to buy when they sell.

I work with a variety of loan officers whom I am happy to connect you with if you'd like to learn about how this new change can affect your 2016 living situation. Call or email me today -- don't wait to start planning your next move. It's better to begin early and be prepared than to rush and try to catch up with your competition.

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