FHA and How it Affects You
Federal Housing Administration (FHA) insures mortgages. These insured mortgage loans have made it possible for middle to low income people purchase a home with little to no down payments. Additionally, FHA loans have had programs that allow the Seller to contribute to the Buyer's closing cost and down payment. All of that is about to change to some degree on January 21, 2010.
Down Payment Requirements Then and Now
In the past FHA allowed Buyers to put as little as zero to 3% as down payment on a home, and that figure was recently increase to 3.5% and still allowed the Seller to contribute up to 6% towards the Buyers closing cost. The new proposal is changing those guide lines. Borrows can still put 3.5% down ifhave at least a credit score of 580 to qualify for 3.5% down payment. Borrows who credit has suffered challenges and can not meet the 580 score will have to put down 10% to purchase a home.
Closing Cost Assistance Then and Now
There was a time when the Seller could pay all of the closing cost for the Buyer except for taxes, insurance and FHA insurance premiums. Then the guidelines changed where the Seller can pay up to 6% of the closing cost, and now 3% in the new proposal.
FHA Insurance Premium is on the Rise
FHA is also proposing to raise its premium to the Buyer for mortgage insurance from 1.75% to 2.25% of the purchase price, which can price some hopeful buyers out of the market because the premium amount is tacked on to the monthly payment.
The Good News Is.....
Most people who are looking to purchase a home usually has a higher credit score, generally in the mid to high 600's, and getting together 3.5% for the down payment is not unreachable. For instance, if the home cost $100,000 the down payment would be $3500. Of course you will have to add your closing cost into the equation and you are set to go.
Unfortunately there have been many loans that have defaulted as evidenced by the many foreclosures we are seeing today. However, FHA is doing what it can to still be available to borrowers while trying to strengthen its programs and finances.
Consult a Real Estate Professional
Today there are over $40,000 home available for sale of various price ranges, and locations. The best way to find out what's available is to contact a real estate professional who can utilize their resources to find the home that meets your needs.
Emage` Fine Properties, LLC has been practicing real estate since 2000, and Cynthia Smitherman the Broker, has been a REALTOR since 1996. We are available to help you understand the "How To's" in the real estate market and how you can fit into various programs.
When calling Emage`, just mention you are looking for a Buyer's Representative, and the services to you are free!
Please call 602 697-4487 or email cynthia@emagehomes.com
Cynthia Smitherman, Designated Broker
Accredited Buyers Broker
Certified Distressed Property Expert
Graduate- Real Estate Institute
At Home with Diversity - Designee
VP Arizona Association of Real Estate Brokers
Accredited Staging Professional
