There are a myriad of changes happening with FHA, and they seems to suggest that the US government is pulling back from the business of housing and handing housing back to the free market. Here are the changes scheduled to affect buyers using FHA starting in April 2012.
- The Upfront Premium will go up from 1.0% to 1.75%. A three quarter percentage points increase is huge. While FHA is continuing to allow borrowers to add this amount into their closing costs, there is concern that buyers will have to bring more cash to the table to close in the coming months. And this change comes as we start to see some serious improvement in buyer activity.
- Also the monthly MIP will change so that a 30 year fixed rate mortgage with a 95% or greater LTV (Loan to Value) will have a 1.25% monthly MIP and 30 year fixed rate mortgages with less than 95% LTV will pay 1.20% monthly MIP.
- And collection accounts at or over $1000, FHA is requiring that there is either a payment arrangement with a minimum of three months history or the accounts be paid in full. Borrowers simply cannot pay down the balance any more, and the age of the items is irrelevant. Medical bills, old collections, new collections, etc. are treated all the same.
So it's going to be tougher to get an FHA insured mortgage starting in April 2012. And Uncle Sam has to be looking to experience a reduction in the number of FHA insured mortgages in the coming years as buyers look to more conventional financing options.
For help buying a home in metro Atlanta, please call our office at 404 923 4210 or call me directly at 404 246 3210.
All information deemed reliable but not gauranteed.
Comments(1)