Potential FHA Changes Could Affect Cedar Rapids Real Estate Purchases!
This just in from one of our real estate resources, potential FHA changes could affect the way we purchase houses and could potentially eliminate some people from purchasing the home of their dreams. Here is a cut and paste summation:
HUD Secretary Donovan and FHA Commissioner testified that they expect FHA to announce major changes to esure FHA’s long-term financial soundness. Some examples are as follows:
1) Increase the down payment required from 3.5% to 5%
2) Raise the upfront premium from 1.75% to as much as 3%
3) Eliminate the ability to roll in to loan that up front premium
4) Increase monthly MIP from .55%
5) Reduce seller concessions from 6% to 3%
6) Raise minimum FICO score
7) Possible LTV maximums by FICO score
8) Increase accountability of FHA Lenders for fraud
Timing: "We expect these changes to be announced soon and could be implemented within a couple months. None of these changes requires congressional approval and can be made administratively and therefore can be implemented quickly."
This is of course going to make it tougher and more expensive for borrowers to obtain FHA loans and therefore reduce the number of eligible borrowers.
One of the major items in this proposed change that bothers me the most is the potential to increase the down payment required from 3.5% to 5% (which is currently what is required of a conventional loan). I mean, let's face it, the reason why most people are using the FHA loan product is because it's good, and because there is less money required as a down payment. Plus, if you raise the minimum FICO scores, some couples might not qualify because they don't have a high enough credit score.
All of these issues could take effect in less than a month, and I will certainly keep you posted if they do. In the mean time, if you are a buyer contemplating buying, please have a "SERIOUS" discussion with your significant other about purchasing NOW versus later. Keep in mind you would also qualify for the federal tax credit of $8,000 if you have a purchased contract agreed upon by April 30th, 2010.
If you still have questions about whether it's a good time to buy or not, that's what I'm here for. Please call me and ask your questions. Thanks and have a great week!
Christopher Smith
TREGO REALTY
www.christophersmithrealtor.com
christopher.smith.realtor@gmail.com
319-329-5988
Licensed Realtor in the state of IOWA
"Success in real estate at the SERVICE of others"