In this month’s news letter we’ll tell what new changes are coming to FHA loans and the details on our contest to win $250,000 dollars towards the purchase of your dream home. For more information about the contest read below. But first…what’s going on with FHA loans?
If you are a first time home buyer or even a second time home buyer and you were thinking about getting an FHA loan from HUD you might want to BUY NOW before they make it harder to get a loan. You may have noticed last week that Housing and Urban Development (HUD) announced they will be making changes to their FHA loan program.
Change # 1: HUD will increase the amount of mortgage insurance required on each loan. Right now it’s at 1.75% of the loan amount. This gets rolled into the loan and you pay for it each month over the life of the loan. HUD will most likely make the change this spring to 2.25%. HUD says this will help them rebuild their insurance reserves after massive losses with mortgage defaults.
Change # 2: If you have a FICO score of 580 or less you will be required to put down 10% as a down payment instead of the usual 3.5%. This will prevent some people from getting a loan. HUD says the risk is too high to loan people with a credit score less than 580 so they want the home owner to put up more money and have more skin in the game.
Change # 3: Going forward HUD will reduce the amount of seller contributions from 6% to 3%. This is probably the most significant change and impacts everyone getting a loan. For cash strapped home buyers having a seller contribute says $6000 dollars on a $100,000 purchase price is a big deal. Soon buyers will only be able to accept 3% (or $3000 dollars) towards closing costs or pre-paid items. Overall not a good thing so buyers should get under contract before this happens.
Bottom line FHA is still the best deal in town for a large majority of the population. There isn’t anybody else right now willing to lend you money with only 3.5% down so for that reason and that reason alone it still a good option.
Above all take advantage of the 6% seller contribution rule now and get under contract with a property before the rule changes.
Finally go to http://www.coloradofirsttimehomebuyer.com/ or for a chance to win $250,000 toward your dream home. It’s easy to win and you’ll get great information about the new tax credits and how to get $6500 or $8000 in your pocket right away.
Please feel free to contact me with questions or if there is any way I can be of help at 303-522-1161 or firstname.lastname@example.org