It is time to get off the fence!
FHA announced new changes this morning to address risk and strengthen finances. Basically, the policy changes are in effort to boost FHA's capital reserve which currently sits at .53% and is below 2% for the first time in history. Below are the changes:
* Up-front mortgage insurance premiums will be increased to 2.25% from the current 1.75%. Meaning: A client will lose .5% of their current down payment, which will now go to insurance coverage versus equity investment.
* Seller concessions will drop to 3% total from the current 6%. Meaning: This is the big one. Standard closing cost run 4.5% of the sales price, which means, 1.5% will be left over. If you add that to the current 3.5% down payment requirement, you have a total investment of 5%.
* HUGE- FHA will pass legislative authority that would require all approved mortgage companies to assume liability for all of the loans they originate and underwrite. Meaning- If you think clients were under the microscope before, imagine a life where lenders will be forced to buy back all loans in default no questions asked. The gray area in FHA's underwriting has officially gone away.
FHA is still leaving the door open and will announce "all" of the official changes at the end of this month. FHA will post it to the register, there is a 60 day discussion period, and then FHA makes it final law. WE HAVE UNTIL MAY or JUNE BEFORE THESE CHANGES WILL TAKE AFFECT.
The time to purchase a home is when the best opportunities are available. There will never be better opportunities than the ones before us now. Call us today for your Free Consultation, 817-441-7707 office or 817-690-0976 Mobile
This information provided may be verified at hud.gov