As if there isn't enough things going up one more is coming. FHA's Insurance Fund; the fund that is used to payout when FHA loans get foreclosed is estimated to be negative $13.48 billion. This is what is estimated to carry 30 years worth of reserves.
HUD announced changes to FHA to begin sometime in 2013. A few other changes in addition to the monthly premiums and initial FHA insurance premium raising are:
- Raising DTI for borrowers with low credit scores. FHA will require borrowers with credit scores below 620 to have a maximum DTI (debt to income ratio) of 43%
- Moratorium on full cash out HECM (reverse mortgages)
- Raising the downpayment for loans above $625,500 to 5%
- Greater oversight on borrowers who are trying to obtain a new FHA loan 3 years following a foreclosure.
FHA is important in offering low downpayment options for buyers. Unfortunately due to the real estate market, job market, and the economy more FHA loans are expected to default resulting in the shortage and changes. If you are thinking about buying why not do it now while rates are still low, prices are continuing to rise, and extra costs like this have not set in yet.
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