We have been hearing that the reserves for FHA financing are below the amounts mandated by Congress. Not a surprise when we see all the foreclosures and HUD homes currently on the market. I have read several stories about the ways that the Federal Housing Administration (FHA) will tighten their lending requirements to reduce the risk and to improve their weakened financial health. There has been talk of increasing the down payment requirement, increasing the upfront mortgage insurance and minimum FICO scores to name a few. Also FHA has cracked down on lenders and pulled the licenses of at least three. First message - if you are a buyer and "on the fence", this is the time to buy! More changes are in store and I don't expect the home buyer credit to be extended again - although I would love it.
So these proposed changes are not good news as I work with a lot of first time buyers. FHA gives buyers an affordable way to own a home at a time when we want to reduce the inventory - too many homes are left vacant to become neighborhood eye sores. Needless to say, I want to sell homes and make sure loans are given to people who really can afford them - a delicate balance.
HUD homes can have the connotation of being bad homes and I am always educating buyers that they are just like other foreclosures - only they are FHA loans that have gone bad. I actually see an advantage to buying HUD homes - the appraised value is established, an inspection has been completed (not to replace a buyer's home inspection) and a property report is accessible on line. If there are repairs, they can be financed into the offer as Insurable with Escrow - 203(b) as long as repairs are under $5,000. They allow 3% seller concessions and, in Michigan, $2500 sales allowance and a $100 down payment.
However, on February 12, the $2500 sales allowance and the $100 down payment is being discontinued. The incentives will be eligible on all owner occupant sales with a bid acceptance date on or before 2/12/2010. All owner occupant bids accepted after 2/12/2010 will not be eligible for the any of the incentives above.
Like I said, there are many changes coming and we can't count on the home buyer credit being extended past April 30, 2010. If you are eligible for the current programs now available, this is a Great Time To Buy - and JUMP Off the Fence.
Royal Oak Realtor Michigan Realtor selling Oakland County Real Estate. TishHouse sells Houses – selling Real Estate Southeastern Michigan with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service. Follow me on Twitter..