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.
Licensed in MD & DC
7821 Tuckerman Lane
301-718-4100 ext. 132