FHA Loan Changes and what it means to YOU!

FHA loans has been the primary source of home financing over the past 2 years. There are some changes over the next few months that homebuyers need to be aware of if thinking about purchasing a home.

FHA MORTGAGE INSURANCE PREMIUM
The increase in FHA Up Front Mortgage Insurance Premium (effective April 1, 2010). UFMIP went up from 1.75% of the loan amount to 2.25% of the loan amount.

WHAT DOES IT ME FOR YOU?
Higher up front and/or monthly expense if the fee is financed.

FHA MORTGAGE INSURANCE
Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages and it's required primarily for borrowers making a down payment of less than 20%. There is a planned increase of FHA Monthly Mortgage Insurance.

WHAT DOES IT ME FOR YOU?
Buyers with tight debt ratios will qualify for lower loan amounts. It will be an increased monthly expense to consumers.

SELLER CONCESSIONS
The sellers in today's market attract many buyers by offering to contribute monies toward the homebuyers' closing costs, known as seller concession or closing help. FHA will be decreasing the maximum seller contribution from 6% to 3% of contract price.

WHAT DOES IT ME FOR YOU?
The homebuyers who depend on seller contributions will no longer be in a position to purchase a home, which will negatively affect sales in some markets.



Call me at 301-452-4767 if you have any real estate questions.