More possible mortgage changes coming…

The Federal Housing Administration is asking for an increase in insurance premiums to replenish it's capital reserves.  FHA is going to ask Congress to raise the 55 basis point cap on annual government MI premiums.  Plus FHA is expected to raise the upfront premium and it could go as high as 3%.   They would also like to prohibit the upfront premium from being rolled into the mortgage amount.  The upfront premium could be paid for by home sellers or by an increase in the interest rate.

All of this would make FHA loans more expensive.  There is a House bill called the FHA Taxpayer Protection Act of 2009 that would increase the minimum down payment from 3.5% to 5%.  They want to make sure that FHA borrowers have more cash investment into the home.  Another possible change is to decrease the allowable seller paid closing costs from 6% to 3%. 

Fannie Mae is raising the minimum credit scores that they require from 580 to 620.  That doesn't affect many people as most lenders already require a minimum score of 620.  They are also lowering the maximum debt to income ratio to 45%.  The debt to income ratios go into affect the week of December 12, 2009 as part of an adjustment to the Desktop Underwriting.  The debt to income ratios will affect how much of a home you will be able to qualify for.  Neither of these changes will affect the Fannie Mae Refi Plus program, which allows existing Fannie borrowers to refinance with loan to value ratios of over 80% and up to 125%.

FHA rules have not been implemented and we don't know what will be the final result.  If you are looking at buying a home with an FHA loan, you may want to look sooner than later!  FHA loans currently account for more than 30% of the entire home loan market.  As some of those loans have defaulted, the FHA loan guarantee fund has slipped below the Congressionally mandated 2% level.  So several lawmakers are suggesting that FHA loans need to be more expensive to get.  That would allow FHA to build up their reserves and hopefully keep more loans from defaulting.

Once we know for sure what the changes are, I'll update everyone!  Just know that we are seeing changes in mortgage qualifying frequently!!  The biggest problem with that is that it can change what you can qualify for in a home loan quickly!

Leslie Vanderwerf, Advisors Mortgage - EmailWebsite

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Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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