Leave a comment »

On July 22nd, the House of Representatives passed a housing bill that is expected to be soon passed by the Senate, and signed by President Bush. There are many provisions to the bill, but the significant provision that will affect buyers is below. It comes directly from the Chairman of the Mortgage Bankers Association of America’s opinion on the legislation:

• 

  FHA Modernization: Authorizes a $25 million appropriation to improve technology, processes, program performance, eliminate fraud and provide appropriate staffing. Effective January 1, 2009, it also increases the FHA loan limit to the lesser of 115 percent of the local median home price or $625,500 with a floor for lower priced markets of $271,000, establishes a 12-month stay on FHA’s proposal for risk-based premiums, sets the down payment requirement at 3.5 percent and prohibits seller-funded down payment assistance (both direct or through a third party).

Okay, so what does this mean to buyers?

Potentially significantly higher loan limits for FHA financing…. which is actually great for buyers!  A down payment requirement of 3.5% instead of the current 3% down requirement, which is a  ½ %  increase over current FHA requirements, which isn’t so bad, and  the elimination of seller assisted down payment assistance programs, i.e.; AmeriDream, Nehemiah, etc…   Well, that’s HUGE, especially for first time home buyers!

In reading the full article, the proposed changes should take place Jan. 1, 2009, assuming no changes are made by the Senate or President Bush. If you been waiting for prices to come down further, but are in need of down payment assistance, and don’t have a cash gift from your parents for the down payment, it would probably be in your best interest to close on your new home before the new year
!
As with all new guidelines, once the new ones are in effect, there will be NO exceptions made. 

If you wait until after the new FHA guidelines to take effect, you might be too late to take advantage of some very beneficial seller incentives in this buyers market.  3% seller paid closing costs equal $6,000 in seller incentives on a $200,000 loan, which in this market can break the lending criteria for certain buyers. 

If you want to know more about the amount and type of loan you can qualify for give one of my loan officers a call.  Dale Noble from Wells Fargo will be happy to answer any of your lending and mortgage questions:

Dale Noble
Home Mortgage Consultant
Wells Fargo Home Mortgage  M2968-012
4332 Fox Valley Center Drive
Aurora, Il. 60504      

630.428.0317 Tel
630.820.5221 Tel
630.878.5012 Cell
866.359.5903 Fax

dale.noble@wellsfargo.com
http://www.ilendfast.com