Two New Reasons To Sell Now Vs. Later

The FHFA, which is the government agency that oversees Fannie Mae and Freddie Mac, decided that lenders must charge higher fees and interest rates to homebuyers who have a debt-to-income ratio greater than 40%. The debt-to-income ratio is the buyer's total monthly debt payments DIVIDED BY their total monthly income. For example, if the buyer's total monthly debt payments (credit cards, car, mortgage, etc.) are $2,800 and their total monthly income is $7,000, their debt-to-income ratio would be 40% ($2,800 / $7,000 = 40%). The new rules go into effect on May 1, which may impact potential buyers at that time. Buyers won't have to pay the extra fees if you close on the sale of your home before then.

Unfortunately, this new rule may cause closing delays or deals to fall through at the last minute after May 1. That's because the buyer's income and expenses can change several times throughout the home-selling process. This is especially true if the buyer's income is from self-employment, part-time employment, or “gig economy” employment. Even small changes in income and expenses can cause the buyer's debt-to-income ratio to cross the new 40% threshold. This may drive up interest rates at the last minute, invalidate loan approvals, or result in closing delays.