Effective December 13, 2008, Fannie Mae will enforce the following single-family residence restrictions:
* Primary residence, “cash out” refinances are limited to 85% loan-to-value
* Second home, cash out refinances are limited to 75% loan-to-value
* Investment properties cannot be refinanced without a 25% equity position
Each bullet point represents a 5 percent tightening over the previous guidelines.
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Now, there are a lot of people sitting around right now, waiting for mortgage rates to fall before buying or refinancing their home.
I’d offer a more prudent idea: Just get on with it already.
None of us can predict what where mortgage rates will go. Recession, inflation, whatever — it’s a big mystery. But, we do know with 100% certainty that guidelines will tighten effective December 13, 2008, and it will prohibit Americans from getting access to mortgages.
Take the time to read the whole thing.