If you’re planning to finance any investment property with Fannie Mae-funded loans, be sure to get your transaction closed before December 1, 2008. This is because Fannie Mae will debut a much higher fee structure for investor loans as of that date.
And these are seriously punitive to investors. Take a look:
- If your down payment is in the 10-15% range, you’ll have an addtional closing cost of 3.75%
- With a down payment between 20% and 25%, you’ll pay an additional 3%
- And with a whopping 40%+ as your down payment, you’ll still pay an extra 1.75%
There are some other limitations as well, including a maximum number of investment properties you can finance (I think that is 4).
Freddie Mac plans to institute similar measures, and they will begin even sooner - November 7.
Contact your mortgage broker for more details - and if you’re privy to any good strategies for reducing the cost of investor financing, sound off in the comments area below!
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2 Comments So Far»
It appears I may have steered you wrong. One of your fellow readers - Caitlyn Coyle - contacted me with the news that these changes have been canceled and/or curtailed.
Here’s the news:
http://www.usatoday.com/money/economy/housing/2008-10-03-mortgage-fees_N.htm
Thanks for the heads-up, Caitlyn. I’ll admit that I’ve not yet had time to review the above link, but in case I’ve shared inaccurate information, I recommend that everyone check out that link.
Here’s the pricing change, direct from Fannie Mae, to which you refer.
http://tinyurl.com/4y7cef
Here’s the reversal of a pricing change but apparently it applies only to the pricing hit for “adverse market.”
It appears that the rest of the pricing changes are still in effect, but I’ll double-check. I had heard all of them were cancelled but the media frequently gets things wrong or incomplete.
http://tinyurl.com/4kaekh
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