The percentage of repeat home buyers has fallen 40 percent between 2002 and 2014, according to mortgage financing giant Fannie Mae’s research.
Why the drastic drop? Jude Landis, vice president of single-family credit policy at Fannie Mae, speculates that for home owners who are credit eligible to buy another home it could be low equity in the existing home that may be preventing them from moving.
Landis urges lenders to promote several loan products offered by Fannie Mae that could help these creditworthy home owners who are “locked in” by insufficient equity to move.
HomeReady is a new program, Landis says, that expands the eligibility to low and moderate-income creditworthy borrowers to finance homes in designated low-income, minority, and disaster-impacted areas. The product offers low down payment financing – up to 97 percent for the purchase of a one-unit property and up to 95 percent for a limited cash-out refinance. The program also includes a feature for extended family households that allows lenders to consider income from a non-borrower household member as a compensating factor in figuring the debt-to-income ratio. It also allows consideration of rental income from an accessory dwelling unit, such as a basement apartment.