FHA proposed changes in the future for First Time Home Buyers. If you were thinking of riding the fence for awhile before purchasing your first home in Maryland, you may want to think again. What are the proposed changes?
•• Raising the FHA up front mortgage insurance premium (UFMIP). Currently at 1.75% of the loan amount it can increase to as much as 3% but Congress will have to vote on it. Not too long ago it was 2.25% and we could easily see it return to that level
•• Limiting the amount of seller contributions towards the buyer's closing costs from the current 6% to 3%. Any of you currently closing deals will realize how big this could hurt. The single most difficult obstacle for first time homebuyers is saving for their cash to close, which brings us to...
•• Requiring higher down payment requirements. Although Secretary Donovan states "there are several ways to accomplish this, and so we are currently analyzing various options to determine which is the most effective", it essentially means buyers will need more cash to close.
•• Raising minimum credit score requirements. Currently FHA allows a buyer with the minimum down payment to have a credit score as low as 500. There has not been a reputable lender going that low in quite some time so depending on what score they settle with, this change may not even be felt in the marketplace. The market norm right now is 620.
When could this change take place?
HUD/FHA is expected to begin formally proposing these changes as early as January, 2010. The most time consuming of the changes will likely be increasing the UFMIP since it will require congressional action. It should be noted, however, that by increasing the UFMIP to the maximum allowable levels it would increase the cost of getting an FHA loan by $1,250 per $100,000 borrowed. To sum it up, if you are planning to buy a home in the near future, the faster you move the better off you will be. If you are interested in purchasing your first home in Maryland, Baltimore, Harford or Cecil County, START YOUR SEARCH NOW! We have the most up-to-date Bank Owned Foreclosed Property List in Maryland. Contact our Team Now!
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