How Fannie Mae Could Boost the Value of Naperville Homes for Sale in 2015

How Fannie Mae Could Boost the Value of Naperville Homes for Sale in 2015

The real estate market could get an early kick start in 2015, thanks to Fannie Mae’s new guidelines on getting a mortgage.

Is it difficult to get a mortgage?

If you want to buy a home for sale in Naperville and have a good credit score, low debt, a well-paying job and are able to afford the 20% down payment, then it’s not really hard to get a mortgage. However, for hopeful borrowers without these credentials, it’s a bit more difficult, unless they want to pay for an expensive FHA loan.

In the past couple of years, the average credit score of an approved borrower for conventional loans was 754, which was already a drop from its peak of 764 in 2012 (but still considered a good credit score). This is not the case for most borrowers who went through a financial crisis when the economy crashed a few years ago.

The average credit score of a rejected mortgage applicant was 723, also considered a fairly good credit score. So why were the “fairly good” borrowers getting rejected?

Lenders were careful and set strict lending policies to lessen delinquencies, especially after the impact of the financial crisis.  Lending guidelines were also unclear as the market recovered, which did not help.  

However, with Fannie Mae and Freddie Mac’s new guidelines in place, banks and other lenders now know exactly when they should approve and reject a loan.

Less strict guidelines for getting a mortgage

According to Fannie Mae and Freddie Mac’s new guidelines, the new credit score minimum is 620 and a minimum down payment of 3% to 5% is acceptable.

However, there are a few drawbacks to this situation. Where borrowers have lower credit scores and lower down payments, buyers can expect an increase in home prices.

Buyers with a lower credit score and a low down payment of 3% can expect higher mortgage interest rates and higher mortgage insurance premiums.

What is the impact on values of Naperville homes for sale?

Lower credit scores and lower down payments which make mortgage loans easily available to homebuyers could have a pretty big impact on the Naperville housing market.

According to the Urban Institute, we could see an additional 1.2 million mortgage loans per year if mortgage availability stays at this level.

The new mortgage guidelines in place could increase homebuying to more than 20% in 2015.

This is good news for homeowners looking to sell their Naperville Il homes, as a 20% increase in potential buyers could mean an increase in market activity, more bids for homes, thereby pushing up home prices and faster sales.

How this benefits home buyers

Homebuyers who wanted to buy a Naperville Subdivision home for sale in the past but had trouble with the mortgage guidelines, can now get easier access to mortgage loans since lenders have clearer guidelines on what qualifies a borrower for a loan.

This clarity in mortgage guidelines is also a step forward in the recovery of the housing market by returning it to normal levels of accessibility for homebuyers and making it beneficial for both buyers and sellers of Naperville homes.

Check out www.RyanHillRealty.com for tips on selling homes in Naperville.

If you are ready to sell your Naperville Homes For Sale call me, Teresa Ryan at 630-276-7575.  As a Naperville luxury real estate expert and Managing Broker/Owner of Ryan Hill Realty, I have the experience and tools to help you sell your Naperville Luxury home.