Exciting changes are on the horizon for homebuyers! Starting in early 2025, Freddie Mac and Fannie Mae are making updates that could simplify the homebuying process for your clients. These changes aim to make purchasing a home faster, less expensive, and more accessible—especially for first-time buyers.

Here’s a closer look at what this change means and how it could benefit homebuyers:

What Is an Appraisal Waiver?

An appraisal waiver allows buyers to skip the traditional in-person home appraisal during the mortgage approval process. Instead, automated tools determine the home’s value based on recent sales and other market data.

Currently, appraisal waivers are available to buyers with an LTV ratio of 80% or lower. But starting in early 2025, this threshold will increase to 90%.

How Buyers Benefit from the New 90% LTV Ratio

1. Lower Down Payments, No In-Person Appraisals

With the increased LTV threshold, buyers can qualify for appraisal waivers with just 10% down. This means fewer hurdles for buyers who may not have a large down payment saved.

2. Faster Closings

Skipping the appraisal process can shave days—or even weeks—off the homebuying timeline. Automated underwriting ensures buyers can move into their new homes more quickly.

3. Cost Savings

By avoiding the in-person appraisal, buyers could save $500 or more in fees. This money could be used for other expenses, like moving costs or furnishing their new home.

4. Reliable and Safe Process

Even without a physical appraisal, lenders will rely on accurate data like credit scores and recent comparable sales to ensure the waiver process is thorough and safe for buyers.

Why This Change Is a Win for Buyers

The new appraisal waiver guidelines address some of the most common challenges buyers face, especially first-time homebuyers. Lower upfront costs and streamlined closings make it easier for more people to achieve their dream of homeownership.

If you’re planning to buy a home in 2025, this update could make the process smoother and more affordable.

Get Prepared for 2025

As these changes roll out, staying informed will help you make the most of this opportunity. Have questions about appraisal waivers or how they could impact your buying experience? Greenway Mortgage is here to help. Let’s discuss how this new policy can benefit you. Give us a call 888-616-9885 or email us at leads@greenwaylending.com.

Understanding Rate Locks: Why Longer Locks Come with Higher Costs

When you apply for a mortgage, one of the most crucial decisions you'll face is locking in your interest rate. But why do longer rate locks tend to cost more? It all comes down to risk—both for you and the lender.

The Role of Interest Rate Fluctuations

Between the time you apply for a loan and the moment you close, interest rates will fluctuate. Sometimes, these changes are subtle, but they can also be quite volatile, even shifting from one minute to the next. Locking in your rate serves as a safeguard against rising rates, much like purchasing an insurance policy.

The Lender's Perspective: Risk Management

When you lock in your rate, you're effectively transferring the risk of rising rates to the lender. To manage this risk, lenders often purchase financial instruments called "hedges," such as U.S. Treasury Bonds, which move inversely to interest rates. However, these hedges come at a cost. The longer the lock period, the more expensive the hedge, which is reflected in the cost of your loan.

How Loan Type Influences Rate Lock Costs

The type of loan you're considering can also influence the cost of a rate lock. Some loans, like adjustable-rate mortgages (ARMs), are tied to indexes that move more slowly compared to the daily fluctuations in the broader market. This reduced volatility can result in lower costs for longer rate locks.

Making the Right Decision for You

Predicting interest rate movements is nearly impossible, which is why choosing the right rate lock duration often comes down to personal comfort. If the thought of fluctuating rates makes you uneasy, opting for a longer lock—even at a higher cost—might be worth the peace of mind. On the other hand, if you're comfortable with a bit of risk, a shorter lock could potentially save you money.

Whatever your choice, we're here to guide you through the process and ensure you feel confident every step of the way.