The FHA has announced policy changes that will affect you, the buyer. These changes are not expected to take effect until the spring or early summer.
Some of the highlights
1) Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending. The first steps will include raising the upfront MIP to 2.25% and secondary steps will involve shifting some of the increase to the annual MIP. An official mortgagee letter on this particular guideline is scheduled to be released tomorrow.
This is for buyers without enough down payment. You will now be required to pay more upfront (however, I believe you may still be able to wrap it into your new mortgage(
2) Update the combination of FICO scores and down payments for new borrowers. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
3) Reduce allowable seller concessions from 6% to 3%. (for instance a seller may concede to pay for closing costs where before you could ask for up to 6% of the price, now you will only be able to ask for 3%)
This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
4.) Increase enforcement on FHA lenders.
FHA is the Federal Housing Administration
Here is a link to the press release if you would like to read it yourself.
Bottom line...buy your new home before the April 30th cutoff for the tax credit and try to get it all done before these changes take place!
