NEW FHA GUIDELINES

Changes are headed our way from the FHA.

New guidelines are coming down the road.  I believe these are good changes for our industry in that perhaps they will stem the bleeding in the future with regard to people just “walking away” from a home.  They’ll actually have skin in the game.

Here are the new proposals:  The mortgage insurance premium that is paid “up front” will be increased from 1.75% to 2.25%.  This increase is slated to take effect April 5, 2010.  There’s a proposal to reduce seller contributions to NO MORE THAN 3% (down from 6%).  And, there’s talk of increasing the down payment for persons with credit scores lower than 580 from 3.5% to 10%.  Finally, there’s talk of raising the “annual mortgage insurance rate” to more than the current .55%.  The FHA is in financial trouble–no surprise there!

Because of the unstable economy, most realtors are relying heavily on FHA for their first time home buyers.  These changes, while they may seem extreme are actually being applauded by realtors, myself included.  The reason we’re all in this mess is because someone in Washingon DC said that people deserve to own a home, so let’s make it easier….well, now we’re ALL paying for that brilliant comment!

Check back to see what has actually been enacted with regard to the FHA’s new rules.

(Realtor Mag, March 2010)