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Saturday, March 08, 2008

Recent Changes to the FHA Loan Program

It seems like the FHA Loan program is being looked to by government leaders, consumers, lenders and anyone in between to save the housing market. As a result there has been a lot of changes to this program within the past few months.

1. FHA Loan Limits Increased: The loan limit has been raised across the entire country. For Maricopa and Pinal County (which includes all the major cities in the Phoenix Metro area) the new limits are as follows:

• One-Family is now $346,250 (was $263,150) = $83,100 increase
• Two-Family is now $443,250 (was $296,390) = $146,890 increase
• Three-Family is now $535,800 (was $360,100) = $175,700 increase
• Four-Family is now $665,850 (was $415,500) = $250,350 increase

2. Down payment Assistance Programs: While this is not a direct FHA feature, one of the major reasons to use the FHA program is because it allows third-parties to contribute towards a buyer’s down payment. The FHA loan limit is 97% of the value of the property but it allows the remaining 3% to be gifted from such non-profits as AmeriDream, Nehemiah etc. Recently HUD (which oversees FHA) challenged the legality of such gifts and threatened to shut them down. The down-payment programs fought back and recently won in court.

3. FHA Secure: This was an initiate from the White House designed to help subprime borrowers refinance into a FHA loan program. It is targeted to those on adjustable rate mortgages facing abrupt increases to their monthly housing payment. The HUD website  has addition information, but here are some high points on how you may qualify for FHASecure:

1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
2. Interest rates must have or will reset between June 2005 and December 2008;
3. Three percent cash or equity in the home;
4. A sustained history of employment; and
5. Sufficient income to make the mortgage payment.

There are further changes coming to the FHA program. Congress is working on a FHA Modernization bill which will decrease the down payment requirement but add risk based insurance (higher insurance for lower credit scores).

So, stay tuned, nothing stays the same in today’s mortgage market.

Shailesh Ghimire
CTX Mortgage Co.
www.aimeeloans.com
www.azmortgageguru.com
(480) 516-1851 / (480) 516-1819
Email me

Posted by Shailesh Ghimire, AZ Mortgage Guru on March 8, 2008 | Permalink

Comments

The FHA loan limit increases will be a big benefit to many homeowners nationwide. Especially in high-cost areas such as California and the east coast, the increases will help more people refinance out of adjustable rate mortgages with payments that are too high. The limits are as high as $729,000 in some parts of the country, making FHA a possibility for millions who could previously not qualify because they were above the FHA limit.

Posted by: RJ Baxter | Mar 10, 2008 5:23:55 AM

You're right, Shailesh. The government seems to think changes to FHA will save the housing market. I hope they're right but I have my doubts that FHA will bring the market back. The limits definitely had to increase since median price has gone up so much, even with recent price drops. It'll be interesting to see in the long term, if the federal government's steps toward assuming more high risk loans will actually help reduce foreclosures, or just prolong the agony and shift the losses from the private sector to the taxpayers. Afterall, it's easy credit to high risk borrowers that started the mortgage mess.

It's really just a matter of time before the housing market picks back up. Real estate is cyclic and due to the easy access to credit and overall mania of a few years ago, the pendulum swung way too far one way. Now it's swinging back to the part of the cycle we don't like quite as much. With low interest rates, high inventory and thus desparate sellers, the buyers and investors will bring the market back soon. Especially as the stock market drops significantly and reminds us of just how volatile other investments can be. An unstable and less attractive stock market may be just what it takes to remind buyers and investors that even with all the highs and lows, real estate is still a good long term investment.

Posted by: Shannon Hubbard | Mar 15, 2008 9:58:43 AM

Today's Most Popular Fha Loans

What is fha loans with bad credit ?

Fha loans are the most popular consumer mortgage loans you can possibly have today.
Also fha bad credit loans are done by the government, basically the government have created these loans years ago and it was actually very popular.
Fha bad credit loans also called fha hud loans have their fha guidelines and fha requirement.
So for you to get a consumer mortgage and an fha approval you need to know the guidelines.

1.Fha fees- fha fees are not so much different than any other conventional mortgage loans you had in the past.
The problem is that some of us that apply to have a consumer mortgage are being charged high points in conventional mortgage loans.
If you will read the fha guidelines you will understand that with fha lending it's a much safer way to go because there are some restriction with the fha fees.
2.Fha appraisal- fha appraisal is also not so different from a normal appraisal you will have to get done in a conventional mortgage.
But here the appraiser that will appraise your home will have to be fha approved to get you an fha appraisal done.
3.Fha conventional- fha conventional is not a normal term but some people are using this term for some reason.
Fha conventional is not related to one another, fha is fha and conventional is conventional.
4.Fha lenders- there are not a lot of fha lenders and fha brokers.
A lot of people think that every mortgage broker can help them with their fha Home mortgage, no.
Only a few Mortgage brokers out there are really fha approved, so before you make a decision about the next mortgage broker you will use make sure they're approved.
5.Fha loan limits- the fha loan limits have changed recently. Until march of 2008 the fha limits were up to $417,000, because of states like California, New york and Florida the fha loan limits have changed to $729,000.
The new loan limits will help many homeowners to refinance their homes and avoid foreclosure.
6.Fha pmi- fha pmi is the mortgage insurance you required to pay.
Please read the fha requirements, in conventional loans you will pay pmi only if your loan is more than 80% ltv.
Since fha programs don't offer a second loan on your mortgage they will make you pay pmi instead, which is good because paying pmi is much better then a second loan.
7.Fha rates- fha rates are much better then conventional interest rates.
Conventional banks have a higher interest rates because they charge to the index of your loan a margin. Fha interest rates have no margin since the fha program is done by the government.
Fha rates are lower then conventional rate loans.

So again learn the fha guidelines and the fha requirements.
now you will know the fha loan limits.
1. you will probably have to pay fha pmi.
3. The fha rates shouldn't be higher then conventional rate loans.
Now go find fha lenders or an fha broker, get your refinance or mortgage done and save your home.

Posted by: yanni raz | Aug 8, 2008 10:13:09 AM

Since I was one of those asking you questions, I really appreciate you getting this information out, especially regarding how the new FHA loan limit will be calculate

Posted by: home loan | Jan 19, 2009 11:46:52 PM

Always good information on your blog. Keep them coming

Posted by: Myrtle Beach Real Estate | May 19, 2009 11:14:13 AM

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