New Housing Proposals Could Put Squeeze on Homebuyers

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The Obama administration released a report to Congress last week outlining what it wants to do to reform the housing finance market.

Some of the proposals include larger down payments, increased fees and possibly ending 30-year mortgages.

Real estate agents like Kemper Funkerhouser say reforms to the housing finance market are needed.

However, he worries about the impact these specific proposals would have on buyers.

"If these go through, it would require local homebuyers to have a greater down payment on their homes, which would make their monthly payments much higher as well," explains Funkhouser.

The proposals include raising the minimum down payment required on a home, a hike that would be felt by both sides in the housing market.

"Buyers and sellers would both be equally affected by it because there's going to be a less number of pool of buyers out there and you are going to see that there is still a large number of homes on the market, just not as many qualified people to purchase them," adds Funkhouser.

Realtors in Harrisonburg say the new proposals could have a ripple effect on the local economy and also force crucial first-time homebuyers out of the market.

Peter Weaver has been in the mortgage business for 40 years and has spent the past five years working with first-time homebuyers, who he says would be most affected.

"In particular, younger homebuyers, because they very often have more than adequate income, they just don't have the saved dollars to put for down payments," says Weaver.

Zac Hittie is looking for his first house and the thought of a higher down payment has him concerned since he's also a recent college graduate.

He comments, "That's going to make it a little bit tougher with having college loans and then trying to look at a higher down payment as well, that would definitely make it tougher."

Hittie says, while they are just proposals for now, the pending reforms might influence how fast he buys.

"I'm just trying to get out at this point and see what's out there but knowing that in the back of my mind might make me move a little bit faster," adds Hittie.

The new proposals being considered would also increase fees charged on loans and begin to phase out the traditional government-backed mortgages of Fannie Mae and Freddie Mac.