March 8, 2011 10:31 am
RISMEDIA, March 8, 2011--If you're on the prowl hunting for a new home, you are probably doing everything you should: saving your money, paying off debt, working on a higher FICO score, etc. For those currently shopping around, it's a great time to buy; the low prices and interest rates are still extremely attractive. However, given this dynamic industry, there are some new rules and guidelines that any buyer should know about before signing the dotted line:
1. FHA loan guidelines are getting less strict. Today, almost 30% of new mortgages are FHA loans, most of which are first-time home buyers looking to take advantage of the low down payment requirements and minimal 3.5% down. With some lenders agreeing to look at applications that have lower FICO scores, these looser guidelines are making it possible for many different types of borrowers to become qualified. Though it is recommended that the lower the credit score, the higher down payment you should put on the table. Either way, options are abound!
2. Some FHA costs are increasing. As of April 18, the Mortgage Insurance Premium on FHA loans will be increasing for those with a down payment below 10%. If your down payment falls short, you will be hit with an added $250 per $100,000 borrowed. This could cause a monthly payment to be increased $50-60 per month and may even mean you have to downsize your ideal home to make room for this added cost. This rule stresses the importance of a sizable down payment.
3. However, origination fees might decrease. In other news, origination fees may decrease come April 1 due to a revision to the Truth in Lending Act. Mortgage brokers will now only be able to accept payments from either borrowers or lenders, but not both. If working with a mortgage broker, inquire how this revision affects you and your buying transaction.
4. Lending guidelines may get tighter in the future. With the possible fading of Fannie Mae and Freddie Mac, in as little as five to 10 years, guidelines to get into the housing market may be even tighter. A 10% down payment won't be suggested, it'll be flat out required, with some advocating an even higher standard. With prices nice and low, home values and prices are bound to rise as well, meaning more money will be required down than if you purchased today.
If you're ready to buy, now is a great time to search for a house and complete the transaction. For many of the reasons above, now is a unique time to invest in your future and we'll never know just when guidelines may tighten.