a guide to the new loan level price adjustments
let's unravel what this upcoming change means
Hello everyone! I’m Sarah Sperber, your trusted REALTOR in the Northern Nevada market, specializing in Reno, Sparks, Carson City, and surrounding areas. Today, I want to discuss a significant change on the horizon for homebuyers that you can’t afford to miss. Fannie Mae and Freddie Mac have recently released new loan level price adjustments, and it’s crucial for you to understand what this means if you’re planning to buy a home soon.
Understanding Loan
Level Price Adjustments
Before diving into the details, I want to emphasize that the best time for you to buy or sell a home is when it’s right for you. There’s no pressure here, but if you’re on the fence and planning to buy within the next year, you need to pay attention to this information. Timing is going to be essential if you’re making home-buying considerations within the next calendar year.
Important Dates and
Financial Implications
The new loan level pricing adjustments are set to go into effect on May 1st of this year. However, we may start seeing some signs of these changes a bit earlier. The key takeaway is that it will benefit you financially (in most cases) to get into a home and close on it before May 1st. Given our average escrow period of 30 to 45 days, this means you should start getting your pre-approvals and begin the shopping process almost immediately.
Key Changes and Their Impact
Credit Score Adjustments
Currently, if you have a credit score of 740 or higher, you’re in a great position. But starting May 1st, the credit score brackets are changing. Improvements will be seen at scores of 760 and 780. Therefore, if you’re in the mid-credit score range, locking in your rate and closing before May 1st is crucial.
Loan-to-Value Ratio Changes
Another significant change involves the loan-to-value ratio. If you have a credit score of 680 or higher and plan to put down between 15 and 25 percent (which is common for a conventional loan), you will feel the impacts of these changes. It will become more costly to borrow money. Conversely, first-time homebuyers and those using FHA loans, who typically put down 3 to 5 percent, might benefit from better rates.
Debt-to-Income Ratio Changes
Starting May 1st, anyone with a debt-to-income ratio of 40 percent or higher will see higher loan level prices. This is a firm deadline, and it’s essential to act before it takes effect.
Strategic Advice
If your credit score is 720 or higher, it’s in your best interest to purchase and close on a home before May 1st to avoid higher costs. While some people are waiting for interest rates to drop further, remember that lower rates mean more competition, potentially driving up home prices. Either way, there are costs involved, but the loan level price adjustments are a concrete change you can plan for.
How I Can Help
If you have questions about starting the home buying process, I’m here to help. We can hop on a quick call to discuss your needs, timeline, and the best strategy to get you into the home you desire within the right timeframe.
If you’re not ready to buy a home before May, it might be worth discussing with your lending partners about adjusting the numbers to potentially get a better rate by putting down less money.
final Thoughts
The upcoming change regarding loan level price adjustments is significant and can have a substantial impact on your home-buying process. If you’re considering buying a home, acting sooner rather than later could save you money. Remember, I’m here to assist you with any questions or guidance you need. Feel free to book a call with me – it’s no obligation and totally free.
Thank you for joining me, and stay tuned for more updates on the Northern Nevada housing market, Reno-Sparks lifestyle, and everything related to buying and selling real estate.