Wednesday, January 20, 2010

NEW improved FHA Policy Changes:Tougher to get a FHA loan.

Here's the lowdown:

Mortgage Insurance Premium... which you may see as MIP is going from 1.75% to 2.25% ! I am of the understanding that this will go into affect in the spring.

Seller Concessions... FHA has allowed up to 6%... This will be reduced to 3%. This change could happen in the early summer.

Credit scores... Used to be the minimum credit score was 620... the change will be 580. If the score is above 580 the applicant may qualify for the 3.5% down payment. If the applicant's credit score is below 580 they will be required to put at least 10% down. This change may take place in early summer of 2010.

Those of you that have read my blog or know me personally know that I have had my own humble opinion of how mortgages in the past have been handled and even whom I felt should shoulder the blame. In my view the government's "involvement" and regulating, while well intended (remember our parents' generation expression? "The road to Hell is paved with good intentions!" ?) was the biggest contributing factor toward bad loans all across the fruited plain. Banks were encouraged/forced to extend credit to people that had no business buying a home on credit. I see here the advertisements and commercials: "No credit? No problem!" The government promoted home ownership as the "American Dream". And we, as a society, well how could we keep anyone from their dream?

I'm sorry... I'm getting a little off track here. The bottom line here is that the federal government is going to change the way FHA gives out mortgages. I suspect that in the short run it will be somewhat painful. I hope in the long run it will keep us from running into trouble again. But you know what? Our politicians will fix that!

Rock on my friends!

No comments: