FHA Gives Buyers A Punch In The Gut
Since the mortgage collapse of 2007, FHA financing has been purchaser’s most popular choice for loans since they offer a low 3.5% down payment, are lenient with lower credit scores, and allow 6% seller concessions.
However, slowly but surely they are making it harder for buyers to enter the market. It may have started with the removal of the down payment assistance programs like Nehemiah which allowed buyers to recieve down payment assistance from sellers.
Here are a few of the latest changes headed down the pipe from FHA….
- An increased up front mortgage insurance premium of 1.75% of the loan amount to 2.25% of the loan amount!!! This fee can be included in your closing costs and there are a few exemptions. Speak with your lender to discuss further.
- Buyers with a credit score lower than 580 will now be required to put down at least 10% instead of 3.5%.
- Sellers will now only be allowed to contribute a maximum of 3% to a purchaser. This has changed from 6%
These changes will be taking effect over the next few months. If you are planning on purchasing a home or refinancing with an FHA loan, now may be a good time to pull the trigger! Another option to consider is that First Saving Mortgage has a 5% down payment program for conventional financing.
All information is deemed reliable but should be verified for accuracy. flickr photo credit- neogabox’s
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