FHA Announces Spring Cleaning

Securing a mortgage loan from the FHA is about to get more expensive.

The FHA announced a number of policy changes to reduce their overall exposure.

It will mean tougher mortgage approvals and higher expenses to secure a home loan approval for those who wait.

FHA is trying to limit their exposure a few areas.

1. Upfront mortgage insurance premiums are increasing to 2.25% from 1.75%
2. Minimum 10% down payments for those with less than a 580 FICO
3. Seller credits are being limited to 3%.  This is 50% of today’s 6%.

The FHA in addition has appealed to Congress to raise an FHA borrowers’ monthly mortgage insurance premiums.

In our FHA vs. Conventional comparisons, FHA keeps winning because the MI premiums are so low. 

  They’re in a spot where they need to balance their mission of assisting home ownership and remaining financially solvent.

They are also preparing to boost the standard of their loan providers.  They’re introducing a “termination clause” to address the issue where it starts.  Should certain lenders represent a disproportionate amount of the bad loans, they will lose their opportunity to originate FHA loans.

As a direct result, home buyers should expect harder FHA underwriting in 2010.  This won’t be as much because of the guideline changes, but more due to the “termination clause.”  For lenders to avoid being the “bad lender,” they will add overlays to insure that they don’t possess a disproportionately bad portfolio.  Examples of this already exist:  The FHA will allow 580 FICO scores, but nearly all lenders require at least 620 FICO.

The new guidelines don’t go into effect until spring, but acting now will save the up-front mortgage insurance premium monies plus lock in today’s monthly mortgage insurance payments before those too get higher priced. 

With the FHA loan rates recovering, this might be as cheap as it gets.

Stay current on all the FHA home loan approval changes on the site.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related posts:

1. A Guide To Getting a Commercial Loan Secured business loans or commercial loans are designed for...
2. A way out of debt Do you have lots of loans and just can’t...
3. CommercialMillionsBonus.com Announces $1 Million Dollar Value Bonus To First 77 People February 17, 2009. New site CommercialMillionsBonus.com is offering a...
4. How Secured Loans Can Rescue You Applying for a secured loan may be the best...
5. Car Finance through a car dealer All of us require proper car financing at the...