BEVY OF FEES FOR MANY HOME, CONDO BUYERS May Negate Recent Drops in Mortgage Rates!
ONE FEE, FROM FANNIE MAE WOULD ADD 0.75% CHARGE TO MANY CONDO BUYERS!
Here in Chicago, the real estate market, and the condo market, continues to struggle. Rising unemployment, tight mortgage loan underwriting standards, and too-high inventory seem to be standing in the way of a quick turnaround in the housing market here.
As summarized in Mary Umberger's column in today's Chicago Tribune, recently-introduced fees by giant U.S. Loan Guarantor Fannie Mae will add fees for those putting less than 25 percent down on their new homes and condos, or whose FICO Credit Score fall below 720, on a 850-point scoring scale. For prospective condo buyers, including many here in Chicago, the fee would add 0.75% to the closing costs for those putting less than 25% down, effective April 1st.
Here is an example - The buyer of a $400,000 Chicago condo, putting a 20% down payment of $80,000, and financing $320,000, would pay a $2,400 fee at closing, or have that fee rolled into the mortgage, in effect increasing the principal balance.
Said Fannie Mae spokesperson Amy Bonitatibus, also in Umberger's Tribune article, "These are targeted pricing adjustments aimed at aligning price with risk for the highest-risk products in the market today, including interest-only loans, cash-out re financing, low credit scores, high loan-to-value loans and condos. Fannie Mae continues to support lenders and provide liquidity to the market."
Dan Green, of Mobium Mortgage, and who also writes a mortgage blog - TheMortgageReports.com - feels new Fannie Mae fees work to undermine initiatives aimed at reducing mortgage interest rates, and restarting a sluggish local and regional housing market in and around Chicago.
Although more and more condo and home buyers seek out FHA-insured mortgage loans - offering lower down payment and credit score requirements, some homes, and many condos, fail to qualify for the lower-down FHA financing. For example, many condo developments less than 50% sold, or 90% owner occupied, or less than two years old, or whose condo declaration allows a right of first refusal to the condo association board, will fail to qualify for FHA funds.
Most single family homes do qualify for FHA loans, but many of these homes require certain repair and upgrade before the buyers can be approved.
Time will tell how badly, if at all, new fees and loan underwriting requirements will impact a housing market turnaround.
DEAN MOSS & DEAN'S TEAM CHICAGO
