New Guidelines Starting August 1, 2010

Fannie Mae is changing the eligibility criteria on I/O ARM’s to protect consumers from potentially dramatic payment increases. While we would prefer guidelines to loosen vs. tighten, we don’t anticipate these changes will impact our business significantly. True, I/O ARM’s are very attractive but with the 30 Year at historic lows, I/O ARM’s don’t get much attention.

Comparing Payments

$150,000 Loan:

~ 3.375%    3 Year I/O ARM:     $421.00 per month

~ 4.50%        30 Year Fixed:     $760.00 per month

A Few Guidelines

• Max LTV will be 70% (as of August 1, 2010)
• 720 FICO or greater
• 24 months of reserves
• For ARM’s 5 years or less, borrowers must qualify at the note rate plus 2% or the fully indexed rate (which ever is greater).

A Great Sales Tool

With that said, for your clients that are looking to buy a bigger home from the benefits of the lower I/O monthly payment, here is the news you can use to get them to buy NOW. Time ran out for the 80% LTV… loans must have funded before August 1, 2010.

Read the details: Fannie Mae I/O ARM