Mortgage Changes Could Face Strongsville, Brunswick, Medina Ohio Homebuyers with Higher Costs

For homebuyers in Brunswick, Hinckley, Strongsville or Medina, rising mortgage rates and housing prices are growing increasingly evident. Given these two specific facets of the market, now is indeed the time to give up renting and move to homeownership, but that’s not all that is changing on the local real estate landscape. Proposed changes to mortgage insurance requirements could soon force mortgage rates up.

These changes are expected to significantly affect homebuyers with poor credit, according to a report from the Urban Institute and Moody’s Analytics.

For instance, if a homebuyer puts less than 20 percent down when buying a home in Ohio, they are required to get private mortgage insurance or PMI to essentially protect the lender should they default on the loan. During the height of the mortgage crisis, there was a high number of mortgage defaults, thus leading to this push for further lender protection.

The riskier the loan is— speaking in terms of mortgage loans given to borrowers with below average credit— the more money the insurer will need to have to have for government programs to back the loan. For homebuyers in Medina or Cuyahoga County with poor credit, these protective changes will translate into higher mortgage insurance premiums, rising anywhere from 0.1 to 0.15 percentage points.

Premiums are said to rise more as the borrower’s score dips lower. Credit.com gives an example: “Borrowers with a 700 credit score could see premiums jump 0.2 to 0.25 percentage points,” while borrowers with a “650 score would see a 0.6 to 0.65 percentage point increase.”

However, homebuyers in Medina, Valley City, Columbia Station, North Royalton, Brunswick, Hinckley and Strongsville should not be discouraged by their own financial situations. No matter what you are able to offer as a down payment, there are options for buyers to purchase a home in Ohio. FHA loans, for instance, allow borrowers with lower credit scores to obtain a loan, although there are certain fees associated with this specific loan type.

At BOLD Real Estate Consultants, we are here to help answer any questions you might have about the changing real estate market conditions. Given the rising mortgage rates, housing prices and impending private mortgage insurance requirements, now is the time to buy before these set in. Contact us today to discuss how you can get started!

Sajag Patel BOLD Real Estate Consultants
440-879-7260

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