Sound the Lending Alarm The FHA is restricting it's lending with new rules! I just read a news release that should wake up any first time home buyers sitting on the fence. The new FHA guidelines are obviously being set to restrict the lending by making it more expensive. So soon beware we are going to lose a useful tool in the FHA.
The upfront mortgage insurance premium paid by buyers at closing would go from 1.75% to 2.25% so for example if someone is looking at a buying a home for $125,000 then presently their premium would be $2187.50 soon it will be $2812.50 a difference of $625.00. So someone needs to WAKE UP!
Then if the borrowers have a credit score in the lower range of the their minimum standards of 580 score then instead of the standard 3.5% downpayment minimum that will change to 10%. So if the preceding difference did not kill the deal how about a difference between the present downpayment of $4,375 or the soon to be requirement of $12,500! So are we burying our first time homebuyers!!??
The next change would be a killer to new home construction since the allowable seller concession (cash back to the buyer for closing cost) will be reduced from the present 6% to a future 3%! Or in better terms you could now get up to $7,500 whereas soon that will be only $3750!
So we are talking about the difference to the buyer/borrower of $12,000 adding up the $625 (from mortgage insurance premium), $8125 (difference in minimum downpayment), and $3750 (allowable cash back from the seller).
So I hope all the buyer's agents out there are advising their buyers of the upcoming changes. This should be a material fact to any buyer or buyer's agent presently looking at possibly looking at buying and using an FHA loan.
The Author:
Larry is a Greensboro Residential Broker, CARTUS Certified Relocation Specialist, Previews luxury homes trained, SRES & CHMS who can assist you with the purchase and/or sale of real estate in the Piedmont Triad Area that include but, not limited to Greensboro, High Point, and Winston Salem, NC. If you’re relocating to or from any other area of the country, Larry connects you with a member of our national team of relocation specialist in your destination or exit city of choice. The destination service is of no cost to you! As your Personal Concierge Realtor Larry provides customer service that is equal to none. Your complete happiness is our top priority! Larry Story — Coldwell Banker Triad Realtors — 336-327-1841 also at http://www.storybookhomes.ws
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