I knew changes in FHA-insured loans were coming. Now it appears they are almost here. Last week, the FHA said it would tighten loan requirements on loans it insures. Specifically, it would raise the MIP to 2.25% from 1.75% - effective this spring - and then seek permission to increase the percentage again.
The FHA also proposed requiring borrowers with credit scores below 580 to put up a 10% down payment. Those with higher credit scores would still qualify for a 3.5% down payment. In addition, the FHA proposed reducing seller concessions to 3% from 6% of the mortgage. Both proposals will require public comment period before taking effect.
These changes coupled with the fact that the First Time Home Buyers tax credit will be expiring on April 30th, 2010 - is more than enough information to start really thinking about purchasing now and not later. Please do not hesitate to reach out to me if you have any questions regarding the pre-approval process.
Take care ~
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