Jan
20
San Diego Mortgage Rates Update 01/20/2010
ByThe Federal Housing Administration (FHA) has announced the details of impending changes to their home loan guarantee program. These changes are in response to the agency’s increased burden as homeowners with less than perfect credit and little down payment flocked to the FHA loan programs when sub prime mortgage lenders disappeared from the market.
The first step will be to raise the up-front mortgage insurance premium (UFMIP) by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge in an effort to build up capital reserves and bring back private lending. The initial up front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
Next , new borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program and for those with less than a 580 FICO score at least 10% down will be required. Of key importance to Realtor’s writing purchase offers will be the reduced allowable seller concessions from 6% to 3%. This change would go into effect in the early summer.
Keep in mind that FHA only insures mortgages and does not lend money so talk with your mortgage lender to verify program changes and keep in mind that these minimums set by FHA are often overlaid with higher minimums by the investors that actually fund the loan.
