Fees and interest rates are about to go up, with government-mandated changes that can cost unaware home buyers thousands.
Both FHA funding and interest rates are set to change - and not in the direction many homebuyers would like to see.
This information is from Bill Dixon, a real estate agent with Zip Realty in Raleigh NC.
"Important FHA information for home buyers, A must read!
Those who wait will pay thousands more or not be able to buy this spring.
Important potential home buyer's information:
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 loan guaranteed by the Federal Housing Authority (FHA)
Changes that will affect home buyers:
1. On April 5th, the cost of up-front MIP (mortgage insurance premium) will go up from
1.75% to 2.25%. A purchase of a $200,000 home will have typically $965 increase in
PMI .This will make up front cost more and will affect monthly payments.
2. Later this spring, the amount of money that a seller can return to a buyer from the
proceeds of the sale will be reduced from 6% to 3%. This loss of buyer concessions on a
$200,000 home could cost the buyer an extra up-front out of pocket closing experience
Proposed changes that could be coming:
HUD Secretary Donovan and FHA Commissioner testified that they expected FHA to announce major changes to ensure FHA's long term financial soundness.
1. Increase the down payment required from 3.5% to 5%.
2. Eliminate the ability to roll into the loan MIP
3. Raise minimum FICO scores.
4. Possibly LTV (loan to value) maximums to FICO scores
5. Increase accountability of FHA Lenders for fraud.
These changes come into effect a long about the time the present Tax Rebate deadline is reached. This is a double whammy on "waiting for the right time buyers." Interest rates are at historic lows but cyclical trends suggest they will soon rise. Home buyers may never see such a chance again."
Thanks Bill for sharing these upcoming changes and proposed changes.
Bottom line - stay in touch with a good lender, and have that preapproval ready. Interest rates are at historic lows, and won't get lower. Inventory is reducing, and pricing is just starting to creep back upwards.
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