Friday, February 19, 2010

Planning to buy a home with an FHA loan? There are changes coming up in April.

If you are in the market to buy a home with an FHA loan,but are "only looking casually", you should pick up the intensity of your home search,in hopes of finding the home of your dreams before April 1, 2010.

In addition,it goes without saying that you should intensify your home search if you are eligible for the $8000 first time home buyer tax credit or the $6500 repeat buyer tax credit. To qualify for these tax credits you must have a home under contract by the end of April and settle by the end of June.

Here are some changes with the FHA LOAN,which you will see:

1. UFIP (upfront mortgage insurance premium) is up 2.25%.

2. FHA loan borrowers with credit scores below 580 will need to make at least a 10% downpayment on their purchases. Lenders are being more conservative and responsible with loans. Lenders are under heavy scrutiny and need extra assurance from buyers with low credit scores,such as the larger downpayment,to show that they are going to be able to meet their mortgage obligations. The minimum downpayment for all other loans is still 3.5%.

3. FHA is going to heavily track the default rates of loans by lenders to make sure buyers are approved for loans that they are actually qualified for. If FHA notices in specific areas that a number of buyers using LENDER X are defaulting on their loans,then FHA will investigate the underwriters of the loans. Furthermore, FHA will prevent the lender(s)from issuing loans in this area(s). This will help cut down on future short sales and foreclosures.

4. Seller concessions/"closing help" will be reduced from 6% to 3%.
-In some cases seller concessions have more than covered buyers' closing costs and so buyers have used the extra closing help to buy down their mortgage rates. We will probably fewer cases of mortgage rates being bought down through seller concessions.

The good news is that mortgage rates are at a historic low so you can buy more house.

Please feel free to contact me with questions and more information on the Metro DC Real Estate Market.
I am here to help.


Adam Bashein
Licensed in MD & DC

Weichert Realtors
7821 Tuckerman Lane
Potomac,MD 20854
301-718-4100 ext. 132

Tuesday, February 2, 2010

For right now FHA loans can be used on quick purchases of bank owned properties

One criteria for a home being approved for an fha loan is that the seller owns the home for at least 90 days. The idea being that investors use FHA loans as a means to buy homes with low money down for the purchase of fixing up homes and reselling them them for sale less than 90 days after he/she/the corporation purchased the home.

A challenge has been when home buyers find rehabbed homes that have just gone onto the market for sale and they want to purchase the homes as primary residence...not for the purchase of rehabbing and then reselling. In some cases sellers have put their homes on the market less than 90 days after purchasing the home and so buyers who intended on purchasing their homes with FHA loans have (a)often decided to continue their home search for an FHA eligible home (so the rehabbed homes have sat on the market for a long time) and some buyers (a)have had the patience to wait for the home to become "FHA eligible".

One of the highlights of the bill is that home owners who put their home on the market within 90 days to resell must have documentation justifying the sale price if it is 20% or higher than what the owner bought the home for (if within 90 days or less).