Are you a well qualified buyer? Have you saved diligently for that 20% down payment on your first home? Did you educate yourself and work toward improving your credit score so that your was higher than 680? Well, then the FHFA (Federal Housing and Finance Association) would like to take this opportunity to completely screw you over! How will they screw you over? With higher rates and fees!
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But wait, for those folks who did not save, have a poor credit score and have not managed their financial lives responsibly there will be discounts and incentives!
If this policy really annoys you, you can always look for non-conforming loans. But keep in mind that the vast majority of loans out there are conforming loans.
Of course, always do the math to make sure the numbers work for you. However, keep in mind that the vast majority of loans out there are conforming. Just because you do not get your loan directly from FHA, FHFA, Fannie Mae or Freddie Mac – they set the rules for what a conforming loan is – and just about all the banks out there want to be conforming so they can hand the loan off and wash their hands of any future liability.
Does any of this sound even a little familiar? While sticking it to qualified buyers is kind of new, much of this should ring a bell. Creating a system that promotes subprime lending? Artificially increasing the number of buyers? Feel like the late 2000s all over again.
If you increase the demand, you increase prices. With our current inventories relatively low – with less than 2 months of inventory on hand – it will not take much to kick this market back into frenzy mode.
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