New loan rules to promote 20 percent down payment

Borrowers may soon need to put more money down up front.A number of media reports have said that new mortgage regulations, which are expected to be officially proposed soon by government regulators, may result in additional fees for borrowers who don't put 20 percent down.

The new regulations will lay out what constitutes a "qualified residential mortgage" – or QRM – for mortgage lenders. The financial reform bill last year said that banks need to keep 5 percent of the risk from non-qualifying loans before selling them to investors, forcing them to keep some "skin in the game" and not leave investors with bad mortgages.

Borrowers who don't meet the final QRM guidelines will likely have to pay higher interest rates or fees for a loan, or go through the Federal Housing Administration.

According to published reports, the regulations will require borrowers to make a 20 percent down payment on mortgages. However, half of that 20 percent is allowed to be a gift, and loans that are eventually purchased by government-run mortgage giants Fannie Mae and Freddie Mac will be exempt.

If the rules go into effect, it may make more sense for people to try to save up before buying Houston homes. A 20 percent down payment on a median-priced local home last month would have been more than $27,000.

Have you heard about the upcoming new Bill that offers a Tax Credit for First Time Home Buyers?

The government has submitted a new program which offers $7,500 tax credit for first-time home buyers. While this is one of the most talked about measures in the upcoming new bill, it is also the most confusing. Simply, the government has created a monetary incentive, a tax credit for first-time home buyers, as a tool to stimulate the housing market. The tax credit will be 10% of the purchase price of a home, up to a maximum of $7,500. That means if the home costs more than $75,000 first-time home buyers (anyone who hasn’t owned a home in the last three (3) years) will receive the full $7,500 tax credit, this is not a new idea. Back in the 1970’s the government offered a similar program with one major difference: this new tax credit will have to be paid back over a period of 15 years, beginning two years after the credit is taken. Basically, the government is providing first time home buyers an interest-free loan  up to $7,500 to help them buy a home! If the home owner happens to sell the home before the 15 years is up, the remaining credit is due upon sale from the profit of the home sale. However, and here’s the best part, if there is insufficient profit, after the sale of the home, then the remaining credit due is forgiven. You really have nothing to lose. There are, of course, income limits to qualify for this incentive. With this new tax credit and down payment assistance, you are finally in the driver’s seat in a buyer’s market with some of the best interest rates to date. Let me help you find your dream home.

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