Home ownership is made easy… and difficult for investors.
Fannie Mae has one announcement that could never be in a better period than today. In an official statement, it has announced that a borrower who holds multiple mortgages will no longer be limited to four financed properties. It states, “Fannie Mae is modifying this policy to allow investor and second home borrowers to own five to ten financed properties if they meet certain eligibility and underwriting and delivery requirements as outlined in this Announcement.”
And you guessed it, the qualifications are quite strict. The borrower must not have foreclosed a home for the past 7 years, has a minimum credit score of 720, no delinquent mortgage payments in the last 12 months, and must pay a 25 percent down payment among others.
That would put real estate investors back to the market. But who can afford to invest in 10 homes the most? Definitely, the high-income earners. But there’s no reason to rejoice yet.
When the rich are obviously tightening their purse strings, there’s even more reason to do so after Pres. Obama has finally pursued his plan of drawing on the wealth of high-income tax payers. In a report by CNNMoney.com, the wealthiest Americans belonging in the 33 percent and 35 percent tax bracket will have a cap of 28 percent in its itemized deductions for their mortgage interest. The report states, “The move is projected to raise $318 billion over 10 years and fits nicely with the president’s campaign pledge to increase taxes only for families earning more than $250,000. Few, if any middle-income homeowners are in tax brackets of more than 28%.”
Low- and middle-income taxpayers however will still receive the same deduction upon filing. For those at a higher level, they’d be receiving only 20 percent instead of the previous 35 percent. While it may rake in millions of government revenues, this move will definitely put a drag on home sales. It’s a discouraging factor for high-end ownership indeed. On the bright side, high-income earners have two years more before the plan takes place.
There’s your controlled market. Win some, lose some.