FHA changes, rate increase predicted @ 1% and the opportunity it presents.

Managing Real Estate Broker with Scott Gregory Group

This is some very important information in this link. One of activerain's members is David Stevens, Assistant Secretary of Housing - FHA Commissioner, has posted the following blog for our review.  This is the most current and accurate information available regarding new changes in the FHA.


What does all this mean? This coupled with the fed not buying mortgaged backed securities (http://online.wsj.com/article/SB126291088200220743.html) as of March 1st leading to a 1% rate increase in addition to a tax credit expiring April 30th means there has not been a better time to buy.

What changes will be implemented?  (announced the following on January 20):

  1. Increase the up-front mortgage insurance premium (MIP) to 2.25%;Simply put, more money upfront to buyer, previously 1.5%. In some cases upfront MIP can be a part of the loan if seller concession is made see line #3. This will go into effect in the spring.
  2. Update credit score and down payment requirements for new borrowers;580 and above ok, less than that will need 10% down or greater. This will go into effect early summer.
  3. Reduce seller concessions to three percent, from six percent. 250k purchase you could get up to a 15k concession including upfront mortgage insurance and all other closing fees. That is now reduced to $7500 so with the example above it leaves you 1875 for other closing cost and pre paids. With the guideline's a 3% seller concession of 3% will not cover all closing cost. The borrower will have to bring some money to closing for closing costs. This goes into effect early summer.
  4. Implement a series of significant measures aimed at increasing lender enforcement. Lender held liable and responsible for loans the originate and underwrite. Effective immediately







Posted by

Scott Strang

Broker Owner

Scott Gregory Group Inc.


Office Phone: (978) 664-2828
Cell Phone:    (617) 312-6717

Connect with me:

Follow Me on TwitterFollow Me on FacebookLets get LinkedinMy Blog

Comments (0)