Real Estate Home Loan Bucks County PA

The opportunity you waited a lifetime for has arrived. That’s right you paid your taxes now get your monies worth and tell your government officials what you think. Before you respond understand what the FHA has done for the industry lately. Then consider that the credit score as it relates to down payment is a mute point because investors don’t buy loans with 580 scores. However limiting the seller assist will cause a great deal of borrowers to no longer qualify for loans.

As you may know, the FHA has really stepped up to the plate in the last few years.

This unique program is part of HUD, and operates in the fashion of insuring mortgages (not issuing or purchasing them), thus making the loans very attractive to investors.  Currently FHA-insured mortgages are at lower rates than either Fannie Mae or Freddie Mac rates.

Borrower’s with a job and credit (traditional or otherwise) can borrow up to 96.5% on a purchase and 97.5% of the value of their home on a refinance.  On a single family home, in some markets, borrowers can obtain loans up to  as much as $729,750.  You do not need to be a citizen to obtain these loans.  And you can utilize the income from family members and others (so called non-occupant co-borrowers/co-signers) that you have a demonstrated relationship with, to qualify income/asset-wise.  All of your 3.5% down payment can be a gift from another person with whom you have a demonstrated relationship.  The program also allows you to withdraw up to 85% of the value of your home in a “cash-out” transaction, well above the standard 75% guides at Fannie and Freddie.

FHA has always been about “responsible” home ownership, and fair lending.  It is remarkably, self-funded with the premiums charged to borrowers!  (You read that correctly.)  While the likes of AIG and GM have taken 100 billion dollar federal hand-outs, FHA has managed its business risk quite well and not cost taxpayers a dime.

FHA-insured mortgages have risen to their largest level ever in terms of the dollar amount of insured mortgages outstanding.  As a result, of this and a declining home value environment, FHA is for the first time ever, dipping below their statutory minimum capital held in reserve.  The little known “fund” called the Mutual Mortgage Insurance Fund (“MMIF”) that actually holds the premiums that borrower’s pay (2.25% one-time up front and .55% of the base loan amount every month), now needs to be replenished.  Rather than selling bonds, or borrowing money, or soaking the taxpayer, HUD has suggested tightening some of it’s standards, in an effort to remain self-funded and non-reliant on the taxpayer/Government.  Refreshing, right?

To that end, HUD has proposed reducing the amount a seller can give to the buyer of their home in a FHA financed transaction, from 6% to 3%.  This will mean that many buyers will, in effect, have more “skin” in the game.  Secondly, HUD is going to require minimum credit scores for the minimum down payment. This is something the “secondary market” has already done.  The hope is that by tightening these underwriting standards, loan performance going forward will improve.   There is a comment period until August 16, 2010 and after that the changes will go into effect October 1, 2010.

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