TAKE ACTION NOW if you need to use FHA financing for your purchase or refinance!
Beginning Spring of 2010 and mostly likely shortly after the extended first time and move up buyer credit expires, FHA will be increasing their fees to ensure they have continued funds in reserve to operate their low down payment and high loan to value loan programs. The most dramatic change comes in the form of and increase of Up Front Mortgage Insurance Premium (UFMIP) typically financed into your mortgage, will go from 1.75% up to 2.25% of your loan amount. This applies to purchases and refinances.
The second most dramatic change is the reduction of Seller contribution on purchases. Originally it was 6% of the sales price, it will drop to 3% of the sales price. What these two changes immediately mean to a borrower is increased monthly cost as well as out of pocket costs at closing.
There are two additional changes simultaneous to the recent HUD letter, they are borrowers with credit scores below 580 will be required to put at least 10% down on a purchase. This is more of HUD shoring up their back side. Many lenders have already adjusted their risk levels to lend no lower than a 620 credit score. I wouldn’t hold your breath if you have a score below that as you should have some extremely “great” compensating factors or circumstances to qualify.
The last component is increased publicity as well heightened awareness of current HUD/FHA approved lenders lending to high risk and potentially poor performing borrowers. These lenders who show a recent history of borrower defaults will be more at risk and accountable to the performance of their loans they sell to HUD/FHA. What this means is: lenders that have poor performing FHA loans risk losing their ability to continue to offer FHA loans in the future.
No time like the present to buy home! Happy Hunting! Call me today to get qualified.
Tu Phan, President of Premier Mortgage: Direct 503-496-0531 tu@premgi.com
Tags: FHA, First Time Home Buyers, Lending, premier mortgage, tu phan