Sandy & South Jordan first time homebuyers that want to take advantage of the current FHA guidelines need to move quickly.
As your trusted real estate consultant I wanted to let you know of some proposed changes to the FHA mortgage guidelines coming up this April 2010 and how it will effect your purchase of a home in Sandy & South Jordan
Changes that are being considered:
Down payment increase from 3.5% to 5% (could be higher)
Seller’s concession (buyer’s closing costs paid by the seller) to be no more than 3%, perhaps even lower.
Mortgage Insurance Premium which is now at 1.75% of the loan amount could go to 3% of the loan. Premium is due at closing.
Annual Premium insurance which is currently at .55% of the loan amount and is part of the FHA monthly mortgage payment could also be going up.
Credit scores could increase to a minimum of a 620 FICO score.
If you’re a first time homebuyer who is currently looking to purchase in Sandy or South Jordan, now would be the time.
The closing costs and down payment would be what are affected the most.
Under the current guidelines a purchase scenario would look something like this:
For a home purchased at $300,000 you would need a $10,500 down payment which can be gifted, $5,066 for the up front premium insurance. You would be allowed up to 6% in a seller’s assist (buyer’s closing costs paid by the seller), in this case that would be $18,000, this would cover most of the closing costs depending on your state.
With the new proposed guidelines the scenario would look like this:
$300,000 purchase price would mean 5% down or $15,000 (there isn’t talk about changing the gift portion). The up front insurance premium due at closing would be $8,550. The seller paid closing costs would be around 3% (some would like to see this at 2%) or $9,000.
Closing costs include more than your down payment and hazard insurance; there are title fees, recording fees, attorney fees, up front real estate taxes and other miscellaneous fees. Depending on the state you reside in, the $9,000 allowed in this example would not cover most closing costs.
If you have been house hunting, and are going to be using FHA financing, this would be the time to move forward with your home purchase. Waiting could potentially mean needing thousands of dollars more in the near future to purchase a home.
If these proposed changes take effect – it’s going to be costly in the future for FHA applicants as credit scores will be have to be higher and out of pocket expenses will also be higher.
As always, keeping you updated. If you or anyone you know is looking at purchasing a home with an FHA mortgage please let them know. If you have additional questions please feel free to contact me.
Avg. Sales Price: 379,000
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