The Federal Housing Administration announced back in the fourth quarter of 2009 that they are planning to tighten a number of rules regarding FHA Government backed loans. They increased the premium for mortgage insurance, changed a number of other metrics and announced that more serious changes were to be put out for public comment. Today (July 2010) the FHA has issued announcements as follows for public comment:
1. Tighter restrictions and higher down payments for borrowers with lower credit scores (below 620). Lower scores will result in a 10% downpayment compared to the current 3.5%.
2. The total amount of money paid on behalf of a buyer including all seller help, Realtor credits and lender credits will be limited to 3% of the purchase price. Today it is limited to 6%. Seller help is a common factor in most home purchases today and the impact of this change will be significant.
These changes, if put into practice, will make it more difficult to get into a home for most borrowers. Simply stated for lower scored borrowers it can add up to 13% to the up front money required to qualify for a loan and up to 3% for higher scored borrowers.
It is expected that the above will be placed into practice sometime after the comment period ends in August.
It may well be worth your efforts to accelerate your home search to avoid these new regulations saving you a significant amount of up-front money.
Seek out a Ziprealty agent to get more details and lender perspectives on these matters.
HISTORY OF INTEREST RATES
HOW RATES HAVE TRACKED SINCE 1974
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