FHA intends to lower the amount a seller can contribute to the buyer’s closing cost during the sale of their home. The current 6% seller concession, will be capped off at 3%.
Other changes include higher mortgage insurance and stricter credit score requirements.
The Federal Housing Administration (FHA) today outlined future changes to the FHA home loan program. The changes first were proposed last month by Secretary of Housing and Urban Development (HUD) Shaun Donovan.
Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels. FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.
Policy changes include:
- Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgagee Letter on Jan. 21 making the premium increase effective in the spring.
- Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take effect in early summer after it goes through the normal regulatory process.
- Reduce allowable seller concessions: The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this to take effect in early summer after it goes through the normal regulatory process.
More info
I have long heard that the super low mortgage interest rates we have today will not last. This week, I found an article that explains why. And when.
April 1 will be the first day that the Federal Reserve will end its debt purchase program and allow the struggling U.S. mortgage market to operate unassisted. As a result, the Fed believes mortgage rates will rise about three-quarters of a percent to about 6 percent, Boston Fed President Eric Rosengren said Saturday.
Fear of a worldwide perception that the U.S. government is simply printing money to use to purchase mortgage-related securities is a big reason the Fed has pulled back, analysts say. If that fear caused a sell-off of U.S. government bonds, it would push borrowing costs substantially higher and derail the economic recovery.
We are still in uncharted waters,” Fed Vice Chairman Donald Kohn said in an unrelated speech Saturday. “We will need to be flexible and adjust as we gain experience.”
Source: Reuters News, (01/08/2010)
There is a huge reason why Chico real estate will continue to stay stable though the winter. The first time home buyer tax credit of $8,000 has been extended though April of next year.
On top of that, other buyers may be eligible for a $6500 tax credit. This credit is brand new, and has not been available in the past.
There are some great deals out there while there are still some short sales and foreclosed homes on the market. Add to that super low interest rates, and there may never be a better time to buy a home.
The federal tax credit for home buyers was signed into law by President Obama Friday, Nov. 6. The tax credit, which was set to expire Nov. 30, has been extended through April 30, 2010 with a 60-day extension if a binding contract is in place prior to deadline. It also was expanded to include existing homeowners who have lived in their primary residences for five consecutive years out of the last eight years.
First-time home buyers still may be eligible for a tax credit of up to $8,000, while existing homeowners may receive a credit of up to $6,500. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.
Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
Click here for a list of frequently asked questions.
Click here for information specifically about the eligibility requirements for existing homeowners.
More info
Not!
Thirty year fixed rate loans are so low, it is wonderful. But, economists agree that these rates cannot continue through our economic recovery. They will need to be stepped up along the way.
If you have ever thought of moving up into a nicer home, now is the time. It may not seem right to sell your current home for less than you think it should be worth, but you will make it up on the other end, plus reap the benifits of these super low interest rates. Read more
Have you outgrown your home? Or want to live in a better area? Now is your chance.
You say you want to wait until the market gets better? Let’s explore this a bit.
With interest rates at 4.75% today, you can get an incredible fixed rate mortgage on your new home. Rates may never be this low again.
You may be worried that your current home has lost some of its value.
As long as you purchase your new home at today’s market value, selling in today’s market should make perfect sense. "Bubble for Bubble, Bust for Bust" is a motto that makes sense to me.
Remember that your real estate taxes are based on the sales price. If you wait for values to go up, you will have a higher assessed value.
In order to get the new home, you have to price your current home to sell quickly. You will want to speak with a lender as soon as possible about qualifying for your new loan. It is getting harder to own two homes at the same time, so you need a good strategy going in.
Talk to a Realtor about your options. Now may be the perfect time to move into the home of your dreams.
