Escondido Real Estate

Updates In Investment Property Lending Requirements

Legal updates for Escondido property investors went into effect in July of 2008.  Just last year investors could avail themselves of sub-prime loans with little or no money down, or opt for conventional loans that required as little as 10% down.

Read Also:  How To Find a Good Mortgage Rate: Escondido Homes

As we all know, the sub prime market is now almost non existent.  As for the conventional arena, Freddie Mac and Fannie Mae now required a down payment of at least 20%.  The tremendous increase in foreclosures impacted the real-estate market resulting in a financial crisis for the insurance industry.  As a result they are not willing or able to absorb additional risk by providing required insurance coverage for the investment market.

Read Also:  Buying Rental Properties: Escondido Condos

Investors will need to be creative

Thus, investors now find they have to come up with increased reserves that can mean three months to a year's worth of mortgage payments.  These funds for investment purchases need to be documented and seasoned for two months in the purchaser's name. 

Another important change is that Freddie Mac and Fannie Mae now limit new investors to a total of four mortgages, a serious drop from the ten that were previously allowed.

Related Posts