The New FHA & $$$$$

By
Mortgage and Lending with Bank of England Mortgage 385907

Okay before we all get to crazy here things are not all that bad.

The DAP's are soon to be history. You can try to get one by now, but you could get caught by the deadlines.

In all likelihood there will continue to be assistance programs from state and county agencies.

But the new premise is that if people want to buy a home, first;

They will have to save some $$$$$.

Problem is that for many they have forgotten how to do this!

How much you may ask?

FHA wants the buyer to have 3.5% of their own funds invested in the transaction. Yes this can be a family effort as gift funds are acceptable.

Think about this:

If you want to buy a $100,000 home you will need $3500, as the seller should be able to cover the rest of your costs.

If the rent on the same home would be $900 a month and you needed first $900, last $900, and a deposit $400, then you would need $2200.

The difference is less than a months wages if you actually qualify for the loan to buy the house.

When you look at it this way it just doesn't seem like such a big deal!

The free ride is gone, welcome to the new improved FHA.

By the way it looks alot like the old traditional FHA, and that worked just fine!

  

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Rainmaker
1,936,382
Tom Braatz Waukesha County Real Estate 262-377-1459
Coldwell Banker - Oconomowoc, WI
Waukesha County Realtor Real Estate agent. SOLD!

Jay

FHA can be a life saver.

In the 80's I used alot of FHA's and then one day all the sub prime stuff comes flying for us. Now I realize that FHA is still right their and available. Great post.

Sincerely

Tom Braatz

Aug 05, 2008 01:24 AM #1
Rainer
129,065
Justin Ukaoma
Vizion KC - Kansas City, MO
Kansas City Real Estate Investments

Good point.  My only concern is will my buyers really start saving money.

Aug 05, 2008 01:27 AM #2
Rainmaker
288,859
Jay Beckingham
Bank of England Mortgage - Delray Beach, FL
Seniors ROCK!

Tom,

while it occasionally gets tweeked, doesn't that olde FHA have a lot of staying power.

i also had great success with the program in the 80's and continue to be thankful for the program today.

jay

Aug 05, 2008 01:28 AM #3
Rainmaker
288,859
Jay Beckingham
Bank of England Mortgage - Delray Beach, FL
Seniors ROCK!

Justin,

well, they'll have to.

historically it hasn't been a problem and after some adjustments in their thinking i feel they'll do what needs to be done.

jay

Aug 05, 2008 01:30 AM #4
Rainmaker
99,135
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Jay,

Great post that puts it in perspective. Unfortunately in my market with average home prices in the high $100k range it means closer to $7k, with rents similar to your example. It really puts a squeeze on buyers but it will weed out some future defaults.

Gerry Suarez, Jr.

Your HUD Loan Pro!

Aug 05, 2008 01:47 AM #5
Rainmaker
288,859
Jay Beckingham
Bank of England Mortgage - Delray Beach, FL
Seniors ROCK!

Gerry,

certainly the numbers will vary in different markets but then they will need more monthly income to qualify for the loan so there's still similarities.

jay

Aug 05, 2008 02:10 AM #6
Ambassador
1,510,452
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

I was thinking about it in the same respect with rentals.  If a renter can come up with first and security (equivalent to last) plus pet deposit, plus application fee, plus cleaning fee, plus.............

That usually equals 2.5%

Right now buying makes more sense (monthly payment wise) than renting in most situations too.

The ONLY way I can think of this scenario NOT making sense is if the home someone is renting gets foreclosed on and they lose their deposits.  STill though...

Aug 05, 2008 02:14 AM #7
Rainmaker
190,983
Susan Milner
Florida Future Realty, Inc. - Cape Coral, FL
Cape Coral Real Estate Broker, FloridaFutureAgents

Jay, you always make so much sense.

Aug 05, 2008 07:36 AM #8
Rainmaker
288,859
Jay Beckingham
Bank of England Mortgage - Delray Beach, FL
Seniors ROCK!

Susan,

thanks, i do my best.

jay

Aug 05, 2008 10:58 AM #9
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Rainmaker
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Jay Beckingham

Seniors ROCK!
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