What Are The FHA Changes For 2013

Reality is that interest rates are still extremely low and depending where you are at in the nation even home prices are still very low.  They may have come up a bit as compared to a year ago but over all they are still low.  Not mention depending on where you live you can probably buy a home with a monthly payment that is the same or even less than what rent will cost you.  I know in Santa Maria, Ca. that holds true for most homes here for sale.   But I also know there are tons of people that can buy a home now but are waiting for one thing or another.   At the same time there are others that have issues with their credit that could buy a home if they just took care of the issues holding them back but for what ever reason still have not done a thing.  Everything is about timing and for those that may need some financing and need to get an FHA loan are going to find it more expensive,  failure to do something can cost you some money.

 

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The important thing to know about FHA making these changes, are due to losses that they have been taking.  Right now FHA is in the red $ 32 Billion that is a Billion with a “B”.  In order to keep this loan program afloat and not another bailout deal they have to raise funds and pass those savings on to the new potential borrowers looking to get a home loan.   Right now Mortgage insurance is 1.25% of the loan spread out over the year.  But may be increasing to 1.35 % next  year.  On a 200k loan that is roughly $208.00 vs $225.00, not a big deal right?  Just a $17.00 extra month .. but that is also $204.00 extra a year.  Here is where it gets good, right now mortgage insurance drops off after 5 years.  Well new changes with an FHA loan is that it becomes permanent for the life of the loan and they only way to get rid of it is to refinance into a conventional loan showing that you have more than 20% equity.  So now you can see the cost because even a refinance is not free that alone will cost you at least 3k if you want to get rid of that Mortgage insurance.  But it does not end there.

They will be more additional new consumer counseling programs to insure that consumer knows they are getting into a home loan and can budget accordingly for a home purchase.   Yes this will cost you money as well, reality is nothing is really ever free.   Aside from that there are a few additional changes that will affect underwriting and how easy or not it will be to get that loan.   For example as of next year the Frank Dodd act goes into effect which will limit the debt ratio to 43% a person can have to qualify for a home loan.  What doe that mean anyways?? Debt ratio.  Simply put you make a $ 1,000.00 your  total expenses, credit cards and your new mortgage payment cannot exceed $430.00 a month.  Right now if you decent reserves, you can go as high as 55% debt ratios.   Basically you are going to have make more money  to buy the exact same house next year.

Everything is subject to change but for now this is what is coming.  Basically it will cost you more money to get a home loan and it will get harder.    If you want to see what you can qualify for give me call.

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