As this year comes to an end, you may be wondering what’s in store for the mortgage industry over the next 12 months.
While it’s fun to briefly play fortune teller, there are certainly numerous things that could happen along the way where your predictions can end up going sideways.
However, it’s safe to say that you’ll see many new lending policy and rule changes in 2014 which might cause you a bit of pain or discomfort during the mortgage application process.
For example, the FHA announced new loan limits that apply to case numbers pulled on and after Jan. 1. Visit https://entp.hud.gov/idapp/html/hicostlook.cfm if you want to check the size of the loan that they’ll insure in a specific county or state near you.
In order to view the updated loan limit information, make sure the “limit year” tab is set to CY 2014. The smaller the loan amount, the bigger the down-payment you would need and perhaps less of a home you could afford to buy. As of now, Fannie Mae and Freddie Mac will keep their loan limits the same for next year.
The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks, isn’t going to sit quietly either. Starting as early as March 1, the FHFA will be adjusting what are called their guarantee fees or more commonly known as “g-fees” in their pricing structure.
Since a “g-fee” is something that gets charged to your lender as a fee for doing business with the FHFA, guess what, your lender most likely is going to pass this fee to you in the form of a higher interest rate.
Another calendar milestone to keep track of is the confirmation of Janet Yellen as the chairperson of the Federal Reserve. When she presumably takes over for Ben Bernanke in the first quarter of next year, the financial markets will need to adjust to having the first woman ever run the most powerful major central bank in the world.
More importantly, she’ll be responsible for carefully tapering and ultimately ending the massive bond buying program that has kept interest rates historically low. You can only imagine the potential knee jerk reactions within the lending community should they feel that she does this the wrong way and at the wrong time. It would spook the mortgage market and trigger a spike in interest rates.
Lastly, the official implementation of the Qualified Mortgage Rule goes into effect on Jan. 10. Due to the complexity of this subject, both of my columns in January will be dedicated to covering it. Until then, assuming that you plan on applying for a home loan soon, you should sit down with your lender and review a copy of your recent mortgage credit report. Better understanding your credit profile and learning how to improve it might help you to fight off some of the mortgage indigestion you may experience in 2014.