Tag Archives: mortgages

New Guidelines for FHA Loans

The FHA (Federal Housing Association), who currently does about 30% of the current loans in today’s market, is changing a few of their rules and fees.  Three years ago, FHA loans made  up about 2% of the loan market.  One of the reasons that the FHA makes most of the loans now is that they only require the buyer to put 3.5% down to purchase a home.  With only 3.5% down, the FHA can also ask the seller to pay up to 3% in closing costs.  The catch to these loans is that they are not cheap and they require the buyer to carry PMI (property mortgage insurance) to protect the risk of such a low down payment.

The changes are as follows:

  • Increase FHA insurance premiums
  • Increase upfront cash by the borrower
  • Focus on enforcement and lender accoutability
  • Reduce the maximum seller concessions from 6% to 3%
  • Raise the minimum FICO score to qualify

I think these could be good changes — the FHA is trying to make sure that the buyer is more strongly qualified so that we don’t end up with people buying homes that they can’t afford.  If a buyer only puts 3% down and gets 6% back in closing costs, they are basically coming up with no cash.  Buying a home takes more than just a down payment; you also need to maintain the home which, overall, is more expensive monthly than renting.

We need to take accoutablility for our expdentures…

Mortgage Rates Remain Near Historic Lows

With interest rates remaining near 40-year lows, and reduced home pricing, it is not surprising that purchasing a home or investment property has become more affordable.

However, many economists believe that interest rates will go up in the foreseeable future. So current rates do present an opportunity for homebuyers, and despite media coverage to the opposite, home loans are being done.  

I remember when I bought my first home, I paid over 8% on my interest rate. I just refinanced my current home with a light jumbo loan and got a 5.62% rate! 

So if you think things are going to be better, don’t wait too long or you will miss a great interest rate.

 Happy Buying!

 -Catherine