Tougher Rules To Buy A HomeAccording to an article on MSN.com, the Federal Housing Administration is changing the rules for home borrowers. The FHA is a government insurance company that backs mortgages and refinancing loans for lenders that follow its guidelines. All My Sons of Maryland learnt that last year, FHA insured 1.9 million loans which is 30% of the market. Pretty remarkable!
In late December, the New York Times said the FHA was insuring 5.8 million single-family homes, a total of $750 billion in loans.
The biggest change to the way the agency operates starting in Spring will be that borrowers will have to pay more upfront to get a loan. The FHA is raising its upfront mortgage insurance premium from 1.75% to 2.25 % of the loan amount. FHA also wants to raise the amount for annual premiums. Other changes by the FHA involve the credit score. The Maryland movers learnt that homebuyers will need a minimum of 580 FICO scores to get loans with only 3.5% down. Borrowers with lower scores will need a higher down payment, minimum of 10% down. Also, sellers ‘concessions’ will be reduced from 6% to 3%. They won’t be able to help buyers with their down payments, only reduce the asking price by kicking in to cover closing costs and upgrades to the house.
The FHA is planning on more monitoring of lenders, including publicly reporting lender performance rankings. The FHA wants Congress to hold lenders liable for underwriting loans violating their policies and procedures. The Department of Housing and Urban Development, parent agency of FHA, wants Congress to drop lenders from FHA programs if they violate their standards.
There’s a huge discussion going on right now on MSN’s forums. People are saying these guidelines should’ve been in place a long time ago, that these regulations make sense. Other people are saying that if you can’t put a down payment, that that might mean that you won’t be able to make your payments later on. Other comments include that if people have a low credit score to begin with, they shouldn’t be having to take care of a mortgage, that they can be defaulting.
In time, we’ll see how these new procedures and policies from the FHA will affect the real estate market. In the meantime, don’t hesitate to call the Maryland movers if you’re in need of reliable moving services, residential moves, commercial moves or long distance moves.