Homebuyers have until April 30th 2010 to find a home and get it under contract in order to qualify for the homebuyer's tax credit. If they can do that by midnight on Friday, April 30th, they will likely be eligible to qualify to pick up a check from the Federal government for up to $8000. But, once that moment is gone, don't look for the tax credit to be extended again.
Waiting an extra few days or weeks to purchase a home this spring could cost buyers thousands of dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by FHA.
Coming just weeks before the April 30th deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage-backed securities purchase program (which has kept mortgage rates artificially low for over a year), these FHA changes make it even more important to act now to save big.
Here are a few reasons why:
On April 5th, the cost of required up-front mortgage insurance for FHA loans will increase from 1.75% of the loan amount to 2.25%. For a buyer of a $200,000 home with $7000 down, the up-front mortgage insurance will increase by $965. While the impact is minimal, it not only adds to the up-front cost, but since it is financed into the loan, it also affects the monthly payment to a small degree, over time.
Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6000 for a home purchase of $200,000.
There is only one way to avoid being affected by all of these costly changes that lie ahead - submit all FHA mortgage applications by the last week in March.
This information was obtained from Karen Chartier of Envoy Mortgage.
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