FHA New Rules are no longer Rumors

FHA New Rules are no longer Rumors

According to a late night Cnn/Money report -- FHA will go to a credit score driven program, higher down payment requirements, lower seller concessions, and higher MIP

Here are some of the facts

• Seller Concession to reduce to 3% from 6%
• Credit score minimum: 580 FICO to have a 3-1/2% Downpayment
  • Lower scores will be higher down payment
• UFMIP (Up Front MIP) will increase to 2.25% (on the average 130K loan, adds an additional $2,925)

Read the entire CNN Story

Now I don't now about you, but I have already been employing these similar strategies (all except the Increased mortgage insurance premium) in my business and in the business models of real estate agents around the country.

If you are a realtor thinking, Oh no, now my business is going to suffer even more -- Hang On and Continue Reading, as there is hope

Let me tackle each bullet point individually

Seller Concession to be 3% down from 6%

Show your seller and entice your potential buyers buy offering the FHA 2/1 Buydown.

• Your seller keeps more money
• Your buyer gets a lower payment for the first two years
  • Heres how it works
  • Assume you have a house on the market for 130,000
  • Assume that the interest rate is 5.75% for 30 years
    • The seller contributes the difference (of the interest payment) over the first two years of the mortgage (in this case I assumed the 3-1/2% down payment) and gives in concessions $3634.92 (2.796%)
• I use this strategy often, yet many realtors and loan professionals either don't use this or don't know about it.  Yes, the buyer DOES have to qualify at the fully amortized rate (5.75% in this scenario) but starts payments 1 - 12 at 3.75%; Payments 13 - 24 are at 4.75%; Payments 25 - The End are at 5.75%

Credit Score requirements to go to 580

It is no secret that if you or your buyer are under that number, they wont get an FHA mortgage.  While there are a few banks out there writing to that or even lower, there are many many extra hoops to jump through that will (not CAN, WILL) delay the closing sometimes up to four to five months.  That's almost as bad as buying a short sale home.

Solution

Credit Repair.  It is no secret that CBA (credit bureaus) are a mass of computers reporting what other computers tell them to.  Greater than 90% of ALL credit reports have many errors.  Errors such as

• Faulty Late Payments

Were you really late on that payment, or did your payment get held some where in the black abyss

• Public Records

What if you have a common name, John Smith or Mary Jones.  And someone else with that same name gets sued in your city, Very good chance that the judgement and lien will appear on your credit report -- It happened to me!

• Excessive Inquiries
• Unreturned Equipment Resulting in Collection accounts
• Collection Accounts

As a former collections person, let me talk about that for a minute.  It IS legal for a collection account to be reported to the credit report (MAny think that it is not, but it is) -- What is NOT legal is the account to be RE-AGED (Violates the FACTA Rule) -- If you have a credit card that goes unpaid or hospital bill that gets miscoded (hey we are all human and make mistakes) - The creditor (or medical office) will send it to a collection agency.  That collection agency will then put it on the credit report the exact time they receive it --NOT WHEN IT WAS OPENED (and thats the legal violation)

Now we all know that we can "dispute" anything on the credit report and after 30 days it is supposed to come off -- Well I hate to break it to you, but unless your buyer has professional representation, the chances of a negative item coming off the credit report are very slim.  EXTREMELY SLIM.  It takes an average of 6 to 30 seconds for a rep at a credit agency to pick up the phone, call the creditor, get someone on the line to verify an account. -- So with that theory, we should have much cleaner credit reports - Again, I hate to break the bad news, but that DOES NOT happen.

MY POINT

Enroll your client in a credit repair program.  Give them 2 - 5 months to get their financial act turned around and they wont have to worry about hoops to jump thru.  They will enjoy quick closings - And they will love you for getting lower car insurance rates, better interest rates on credit cards and that house you sold them.

Best part, THEY will TELL EVERYONE ABOUT YOU.

(Whats that going to do for your business)

Call To Action

• Learn how to enjoy a professionally marketed credit repair campaign, and install it on your website that people visit right now
• Dont have a website -- I can help you with that
• Need more listings to attract more buyers, I can hel you with that
• Tap into Hidden Markets
• Enjoy Professional Websites for all of your listings that include unlimited media, pictures, videos, has call capture IVR, text capture IVR, exclusive leads, auto follow up for your contact database, PLUS MUCH MUCH MORE

Realtors and Loan Professionals -- This is not Rocket Science -- But here is what to do

Sign up for the live event held in Tampa or sign up for the Online Event

Common Denominators: What Haiti Relief Efforts, Hilton Hotels, The History Channel are using and how to incorporate that technology into your business

For those of you who want to immediately try this out, feel free to email or respond with a current MLS listing and I will send back to you the live demo