January 21st, 2010 categories: Mortgages
There are some changes coming in the FHA requirements that are worth noting. The Federal Housing Administration has been under pressure recently due to higher defaults and falling reserves. To be clear, you should know that the FHA doesn’t actually lend money to home buyers, but insures lenders against default of loans that meet FHA requirements.
To help shore up their reserves, FHA is increasing its upfront insurance premium fee to 2.25% (up from 1.75%). It has also asked congress to increase the annual insurance fee it receives from borrowers. These changes will take effect this spring.
To guard against defaults, the FHA will be raising the minimum down payment on borrowers with credit scores less than 580 to 10% of the purchase price (currently 3.5%). This won’t effect the majority of FHA borrowers as fewer than 1% of those borrowers last year had a credit score under 580 (according to LPS Applied Analytics).
Also, the amount of seller paid closing costs will be reduced from 6% to 3% of the purchase price.
Both the 10% down payment and the seller paid closing cost cap will go into effect this summer.
While all of these new provisions will make it a tad more difficult for lenders to push some new borrowers through underwriting, the majority of buyers will be unaffected by everything except for the higher insurance premium.
As always, leave any questions or observations in the comments below.
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August 6th, 2008 categories: Finances, Home Buying
UPDATE (2/24/09): Revisions have been made to this bill with the American Recovery and Reinvestment Act of 2009. After reading about this bill, read about the changes made here.
In this second post of our H.R. 3221, the “Housing and Economic Recovery Act of 2008″ Series, we talk about a provision included that allows most first time home-buyers to receive at $7500.00 tax rebate. Make sure you read all the way through as there are some caveats and a TWIST. Here are the details you need to know:
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March 18th, 2008 categories: Finances, Home Buying, Mortgages, Real Estate
With the constant barrage of negative media surrounding real estate these days, it’s no wonder that newlyweds and other first-time home buyers are putting their dreams of buying their first home on hold. But 2008 promises to be as good a time as any to buy your first home and here’s why:
With foreclosures adding houses to a market already hungry for buyers and economists predicting that residential housing sales and prices will not pick up until 2009, sellers who need to sell are lowering prices and often throwing in additional incentives.
Although you should educate yourself and use caution when buying into a declining market, a buyer waiting for prices to hit absolute bottom, usually waits too long and then pays the cost of buying into a rising market with increased home prices. If you’re planning on staying put for a while, now is a great time to buy your first home because the market will eventually balance itself and turn once again to a seller’s market and when it does, your home’s value will increase too.
Recent Federal Reserve decisions have lowered interest rates yet again making the Federal funds rate drop to 2.25% (down from 5.25% a year ago) and the prime rate drop to 5.25%. And today a Bankrate.com index showed that the national overnight average for a 30-year, fixed-rate mortgage is being offered at 5.74% and a 15-year fixed at 5.09%, both of which are buyer-friendly rates.
Even if you don’t qualify for enough financing to buy the home of your dreams due to tightening lending practices, it’s easier than ever to fix-up and maintain properties with the number of home improvement stores, tips, do it yourself classes and handymen readily available. And because new construction has slowed down in most markets and all trades that depend on it are eager for employment, buyers are likely to get better work, done faster and maybe a little cheaper in 2008 than at anytime in the future.
Remember, sellers who don’t need to sell right now generally don’t have their properties for sale. And those who do need to sell tend to be more flexible in negotiations, so buyers should consider proposing terms that ask sellers to help make the deal work beyond just lowering their price. Sellers may have the ability to finance part of the purchase price to make it easier on the buyer, they may be able to fix or replace something that needs updating, and they can always pay more than the customary share of closing costs and taxes.
Happy House Hunting!! 
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