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FHA &
HUD Changes in 2010... |
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FHA ANNOUNCES POLICY CHANGES TO
ADDRESS RISK AND STRENGTHEN FINANCES! |
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New Measures Will Help FHA Better Manage Risk, While Maintaining Support for
the |
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Housing Market and
Improve Access for Underserved Communities. |
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Effective
April 5, 2010: |
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The FHA
mortgage insurance premium (MIP) will be increased to build up capital
reserves and bring back private lending: |
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Up-front
MIP will be raised from 1.75% to 2.25% (This is financed with the loan). |
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Monthly
MIP premiums will not change at this time but may change at a later
date. |
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Per HUD Mortgagee Letter 2010-02 |
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Proposed
for Summer, 2010: |
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HUD is
proposing to update the combination of FICO scores and down payments for new
borrowers. |
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New borrowers must have a minimum
FICO score of 580 to qualify for FHA's 3.5% down payment
program. |
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A 10%
down payment will be required from borrowers with less than a 580
FICO score. |
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HUD is
also proposing a reduction in allowable seller concessions from 6% to 3% |
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Per HUD Press Release 10-016 |
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To see how lenders are
reacting to the above changes, we have included an email from one of
them, (used with permission.) |
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Those Who Wait Will Pay Thousands More This Spring
Waiting a few extra days or weeks to purchase a home this spring
could cost buyers thousands of extra dollars as the office of
Housing and Urban Development (HUD) implements several changes for
loans guaranteed by the Federal Housing Authority (FHA).
Coming just weeks before the April 30 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 home loan 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
loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a
borrower purchasing a $200,000 home with a $7,000 down payment, the
up-front mortgage insurance will increase by $965. Up-front mortgage
insurance is typically financed in the final loan amount so the
impact to a monthly payment will be minimal but overall, the
increase is still borne by the borrower both upfront and monthly.
It is important to note that in order to be eligible for the lower
cost up-front mortgage insurance, a lender has to order a case
number from the FHA before April 5th. A case number can only be
generated for loan applications where a property is involved and a
fully executed purchase contract exists. Home buyers who have been
pre-approved but are not under contract will not be eligible for the
reduced premium effective April 5th.
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 $6,000 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 of March.
If I can answer any questions you may have about how these changes
could impact you, call me. I appreciate your business.
Sincerely,
Ann McKinley
Network Funding
Phone: (512) 331-7292
annmc@austin.rr.com |
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