Amidst the rising foreclosures in our country, the Federal Housing Administration has seen dramatic losses and its reserves have fallen below Congressional required levels.
In response, FHA is raising fees and tightening lending standards in an effort to bring more revenue to the agency and continue to keep FHA loans available to YOU, the consumer.
If you are waiting to purchase a home during the Spring/Summer market, you will be amongst the borrowers affected by the new changes. It may be time to get off the fence now, instead of later!
Although specific dates have not yet been announced, here is a snapshot of the upcoming guidelines:
Raise the UFMIP (up front mortgage insurance premium) to 2.25%. Right now, that premium is 1.75%. We will still be allowed to "roll" the premium into the loan, but this increase will absolutely increase the total loan/payments that the home buyer is approved upon. This change is scheduled for this spring.
FHA is also seeking legislative authority to increase the annual premium (currently .55%)...More to come on that, as all of this continues to unfold.
Reduce allowable seller paid closing costs from 6% down to 3%. If you are a first-time home buyer who is "cash strapped", this could be a significant blow to your ability to purchase a home. This change is scheduled for early summer.
So what is The MN Mortgage Mom's recipe for success? Don't wait! If you have the means and ability to purchase a home, do it now!
Sherry - Great info! And it's about time standards are being tightened. The last thing we need is a repeat of the housing meltdown debacle.