Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

   Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

   On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

   Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

   There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.

  If I can answer any questions you may have about how these changes could impact you, call me. I appreciate your business

 FHA 90-Day Waiting Period Temporarily Waived

     Previously there has been a "waiting" period,  for a buyer using an FHA insured loan, to buy a home which has transferred within the last 90 days. This rule was put into place to deter those who would sell a property from one person to the next, usually several transactions within a short period of time, in order to escallate the value of the property and to profit from it.

     This is very good news for both buyers and sellers, especially investors. While there will still be checks and balances to insure that property values are not artificially inflated, this change will open up some doors for buyers looking to make use of the federal tax rebates currently available.

     If you have any questions regarding this change, the homebuyer tax credits, or any other real estate topic, feel free to contact me. To read the article about the changes to FHA, click here.