Know Thy FHA Changes...

An FHA loan is a very valuable tool with it’s low down payment requirements, lower credit score requirements and the allowance of non-occupying co-borrowers. In the recent slow economy FHA loans have been in big demand, but unfortunately, dealing with that high capacity has lead the government to make some changes. Some changes are already in the works, inevitably more will follow.


One such change that has already been made is An increase in FHA Up Front Mortgage Insurance Premium. This change became effective April 1, 2010. UFMIP went up from 1.75% of the loan amount to 2.25% of the loan amount.

Impact to consumers--Higher up front and/or monthly expense if fee is financed.

Two changes that are in the works and will likely take effect:

1. An increase of FHA Monthly Mortgage Insurance. If enacted it will be an increased monthly expense to consumers.

Impact to consumers--Buyers with tight debt ratios will qualify for lower loan amounts.

2. A decrease in maximum seller contribution from 6% to 3% of contract price. If this does come to pass, it may negatively affect sales in some markets.

Impact to consumers--Those who lack cash for closing costs or downpayment assistance and rely on seller contributions for such, will no longer be in a position to purchase.

These are somethings to be aware of when considering an FHA loan. Don’t necessarily leave everything up to your mortgage professional, feel free to do some reading up yourself and ask questions. An educated consumer is always a better consumer!

The Price is Right!

Some 24 percent of listings currently on the market in the United States as of July 1, 2010, experienced at least one price reduction, according to Trulia.com.  

What does that mean to you, the buyer?  It means there are deals to be had.  It's still a buyer's market.  Your negotiating power is stronger than ever.  There is still a slight imbalance sometimes between what sellers think they should get and what the market will actually bare.  So it is to the buyer's advantage to have an astute real estate agent research other comparable sales in the area and negotiate with the seller.

What does that mean to you, the seller?  It means you need to choose a real estate professional who will price your house right.  You need to have an agent who will research recent sales in the area and find out what your home is really worth and price it accordingly.  This will lend itself to getting your home sold quickly without any price reductions that just prolong the sale.  An agent such as myself, will price it right the first time!

Despite some painting a gloomy economic picture right now, it is really a great time to move real estate!