Northern Michigan Real Estate

Some great, simply explained, FHA changes to it's lending policy. 

New Lending Policies Announced by FHA  

 If you've been listening to the housing news, you've probably heard about some lending changes that were announced by the Federal Housing Administration (FHA). While many of the news reports were confusing, the truth is pretty clear...and isn't as bad as some people may have heard.

Overall the measures announced by the FHA are intended to help the organization better manage its risks and strengthen its capital reserves, while still providing home loans to the nation.

The good news, as FHA Commissioner David Stevens stated recently, is that "by continuing to provide affordable, responsible mortgage products, FHA will support the housing market's recovery" and "remain the largest source of home purchase financing for underserved communities."

What's Changing?

If you or someone you know is considering an FHA loan, some of these changes may affect you. Here's a clear, concise rundown of the major changes and what they mean:

1. Increased mortgage insurance. The mortgage insurance premium (referred to as private mortgage insurance by many people) will be increased from 1.75% to 2.25%. This change will add some cost to purchasing a home, but will not overburden consumers since the mortgage insurance is paid over the life of the loan, rather than upfront at closing. This change will become effective on April 5, 2010.

2. New down payment and credit score requirements. According to the new policy, homebuyers who have a credit score of at least 580 may still be able to purchase a home with 3.5% down, but those with credit scores of less than 580 will be required to put down at least 10%. This change is designed to help the FHA balance its risk, while still providing affordable down payments for consumers with a history of good credit and responsibility.

3. Reduced seller concession. Basically, this change means that the person selling the home will now only be able to offer the homebuyer 3% to help defray closing costs, as opposed to 6% under the previous policy.

In addition to these changes, the new policies contain a series of new measures aimed at increasing lender enforcement.

The bottom line is that the changes will impact some homebuyers more than others. But in the end, the FHA is still committed to providing affordable home loans.

 MORE INFORMATION on this and any other loan questions can be directed to my loan officer

Steve Vels                                                                                                 Heidi Engel REMAX Suburban

Senior Mortgage Consultant                                                                 BROKER/Realtor/ADPR/SRES/FSSR

American Fidelity Mortgage Service                                                 LISTING + SELLING HOMES for OVER 20 YRS 

630-400-0240                                                                                         Direct         847-385-3327

630-681-1010 ext 167 Direct line                                                      Cell             847-910-2001

SteveV@amfsi.com                                                                                 HeidiRemax@aol.com

www.stevevels.com                                                                               http://www.HeidiEngel.com 

With all of the changes in the mortgage industry American Fidelity Mortgage stands tall, and holds Illinois' longest active mortgage banking license since 1981!!!  You've heard of the rest, you've found the best!