On December 19, 2009, I published my monthly newsletter and warned my clients that FHA Loans were going to get more expensive in 2010. Today, the FHA formally announced the cost of the loans they insure will be increasing very soon. Here are the changes:
- The current Up Front Mortgage Insurance Premium is rising from 1.75% of the loan amount to 2.25%
- The annual mortgage insurance premium is being increased from .55% of the loan amount to a higher percentage.
- The down payment for borrowers with sub-580 Fico scores is rising from 3.50% of the purchase price to 10%.
- Credits from the seller to the buyer to help with closing costs is being cut from 6% down to 3% of the purchase price.
It has been reported that some of the changes will be effective in the spring and other changes will be implemented in the summer. A press release is scheduled for 1/20/10 to further detail the effective dates of these changes.
Word to the wise. If you are looking to buy a home and you are using an FHA Loan, get a move on! The longer you wait, the more it will cost you. Not to mention, interest rates have been on the rise....
Aaron Cullen is a Realtor , Real Estate Broker , and Owner of Brokers Inc. Residential Real Estate. Aaron lives in Folsom, CA and specializes in representing home buyers and sellers in Folsom, El Dorado Hills and the Greater Sacramento Region. Having located from the Bay Area in 2004, Aaron continues to work with home buyers in all cities lying between the Bay Area and Sacramento Area.
While I believe the lax lending standards from a few years back were insane and are to blame for the current housing mess, the pendulum tends to swing into the opposite direction in order to correct itself in a reasonable middle ground. These new FHA standards are not helping to improve the real estate market and I hope they eventually relax a bit.
Hi Sandy, I could not agree more!