FHA to Make Changes

   FHA recently announced that in order to address risk and strengthen finances, they are going to revamp some of their policies and giudelines.  These changes, while seeminly insignificant, will have an impact on all FHA buyers. Here are the proposed changes in H.R. 5981 in a nutshell:

1. Upfront MIP(mortgage insurance premiums) will be reduced from 2.25% to 1.0% of the loan. YIPEE!!

2. Yearly/monthly MIP limits will be increased from.55% of the loan to as much as 1.55%, if Dave Stevens deems it necessary. 

    While these changes seem insignificant, they will have an impact on home buyers. Especially since most buyers are having sellers contribute to their closing costs.

   There are also talks about cutting the allowable seller concessions in a transaction from 6% to no more than 3%. All of these changes will affect FHA case numbers created after September 7th, 2010.  

If you have any questions regarding the changes on the horizon, feel free to contact me.

Here is an example of how the changes will effect buyers:

Market Classification Changes!  

Recently, as of April 19, 2010 , the classification for the real estate market in Maryland has changed from "severely distressed/class 4" to "soft/class 2". What does this mean? While this doesn't mean that we are back to "normal", it is a move in the right direction. With the recent reclassification, banks are now able to offer some more attractive loan options for home buyers. In a class 2 market, buyers with a credit score of 700 or better will now qualify for a conventional 5% down loan! Keep in mind FHA just increased their MIP and are soon to increase their required down payment. When comparing apples to apples, cash to close on a property may be slightly higher with the conventional 5% down loan, but the overall loan amount will be lower. If you would like to know what type of homes are available or what type of loan / loan amount you qualify for, feel free to contact me. Thanks!