As the U.S. housing market continues to recover and makes its way into the traditionally busy spring season, prospective homeowners hoping to buy property in the coming months may be able to benefit from low down payment loans.
According to NBC News Business, lenders such as Fannie Mae have been reluctant to approve anything less than 20 percent up front over the past four years as the real estate industry and the overall U.S. economy have struggled to emerge from the Great Recession. Although Fannie Mae will buy loans with 3 percent down payment, this option requires private mortgage insurance which has been difficult to obtain.
Now, with the housing market improving, private mortgage insurers are loosening some of their rules and enabling individuals with less than ideal credit scores to qualify for a loan – making these options cheaper than those offered by the Federal Housing Administration.
"In general lenders have been willing to do more than they may have been willing to do in the past," said Fannie Mae's chief credit officer for single family business, John Forlines. "Our requirements have not changed significantly, but other parties taking risk, the lenders and mortgage insurance companies in particular, have been more flexible than they may have been in the past."
While mortgage rates are still considerably low, prospective homeowners who qualify for a loan at this time and are interested in buying a house may want to take advantage of affordable rates and reasonable property prices. To prepare for a potential influx of borrowers in the coming months, lenders ought to invest in loan management software to ensure that the trend continues. This kind of program can help individuals remain financially responsible and stay on top of their monthly payments.