We have all heard about the current Tax Credits but did you hear about the new FHA loan guidelines that will go into place Feb. 1, 2010.

The first thing to change is that FHA will no longer make people wait 90 days for “flipped” homes. Right now when a home that was bought by an investor and fixed up, a buyer had to wait 90 days to get a loan. Now the requirement is that the buyer will need 2 appraisals for the property to determine value. Kinda dumb but it beats waiting 90 days.

 

The second change is down payment. A buyer must have a credit score above 580 to put down a 3.5% down payment. If your credit score is lower than 580 then you must put down 10%. This is a good rule and should not affect anybody.

 

The third change is mortgage insurance. Mortgage insurance on FHA loans has been 1.75% of loan value. This is insurance to protect against foreclosure and is amortized in the loan. It will go back to 2.25%. This will only affect the payment a few dollars.

 

A big change is seller contribution to buyers closing costs. The new maximum will be 3% contribution. It was 6%. I felt that was too high and not fair to sellers.

               

All in all, FHA is a very viable option for all buyers. Buyers need to have down payment and 3½%. It is not very much when you consider the risks banks take. Interest rates remain steady around 5% and it continues to be a great time to buy. Please give us a call and we’ll show you how.

 

Thanks,

 

 

Brian