Atlanta home buyers seeking FHA financing may want to proceed now. US Department of Housing and Urban Development (HUD) formally announced changes to FHA financing Jan. 20, in an effort to strengthen their capital reserves and stability. The changes will impact all lenders in the spring.
FHA-backed financing has exploded following the financial crisis and ensuing mortgage lending tightening environment. FHA only requires a 3.5% down payment and can be more liberal in certain underwriting standards. Currently, qualified buyers of HUD-owned properties in Georgia, the down payment required drops to only $100. Check out Pemco's Georgia homes at: http://www.bidselect.com
FHA popularity has zoomed from as low as 6% of the market in recent years (also known as the exotic days or Wild West era) to 30-40% of the Atlanta lenders business today.
Here are some of the pending changes, according to HUD:
1. Mortgage Insurance premium will be increased. The Upfront Mortgage Insurance Premium (UFMIP) will change from 1.75% to 2.25%. This is expected to go in effect in the spring.
2. Update the FICO score and down payments for new borrowers. A floor of 580 would be established for the 3.5% down program, under 580 would require 10% down. After a comment period, would take effect in the early summer.
3. Reduce seller contribution from 6% to 3%. After comment period, would take effect in early summer.
4. Increase enforcement on FHA lenders. This has already begun, with the recent probe of companies with significant claim rates.
(Source: HUD News press release Jan. 20)
In a nutshell, buyers wishing to seek FHA financing would be better served to take action now.