New FHA Requirements and How it Will Affect You

So today the Commissioner announced some changes that are in the pipeline for FHA mortgages.  Since I would say today in our area 3 out of every 5 mortgages are FHA this will impact a lot of us in this area.For new borrowers to qualify for a loan if they have a 580 credit score they must now put 3.5% down on the transaction.  For someone with a lower score they will have to come up with 10% down on the home.

The FHA has decided to raise up front mortgage insurance costs from the borrower from 1.75% to 2.25%.  They are also requesting permission to increase the maximum MIP that they can chargeDoes it suprise you that an insurance company wants to increase rates?  Doesn’t suprise me a bit!j0432728

 For new borrowers to qualify for a loan if they have a 580 credit score they must now put 3.5% down on the transaction.  For someone with a lower score they will have to come up 10% down on the home.

The bigger change is that sellers can now only contribute 3 % on an FHA sale which is down 3% from what we’ve normally used at 6%.  It seems they want buyers to have a bigger financial stake in their home by them having to actually put money into it upfront.

FHA loans have gone from a low of 3% of all totals loans to now a high of 40% of all loans.  Here in Grant County that is now probably a estimated of about 75% of all loans so this will impact a majority of our loans in some way.

The biggest impact we will see in our area from this is the loss of 3% of seller contributions.  Some people to qualify for a loan need the full 6% to actually qualify for the loan as they don’t have all the needed cash to close.  This will affect how many buyers are out there buying homes here in Moses Lake.

Posted on January 20, 2010 at 11:11 am
Heather Adkinson | Category: banking, Moses Lake | Tagged ,

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