If you’ve been thinking of buying, NOW is THE time …  and I’ll tell you exactly why!

FHA mortgages have been very popular recently.  There are many reasons for this, including lower down payments, lots of options to obtain help from motivated sellers, and the ability for people with less than perfect credit to enjoy home ownership.

 Yesterday we received guidance from several lenders that FHA rules will be a-changing.  The guidelines will be tightened significantly in the coming weeks and months.  Here are some important changes that could affect your 2010 home purchase.

 *  The upfront Mortgage Insurance Premium (MIP) will be raised to 2.25% from 1.75%.  This will be effective in the Spring and the date is not known yet. 
Bottom line: you’ll pay an additional half a percent of your loan amount at settlement.

*  HUD has put in a minimum FICO of 580 for the 3.5% down payment.   This change will go into effect sometime in the summer.  Note, however, that most lenders have already raised the limit to a 620 minimum, so this is really not a big change, but there is a probability that we’ll see the minimimum FICO score with most lenders increase to 640.
Bottom line: It’s getting harder for anyone with less than pristine credit to qualify for a mortgage.

*  Seller concessions moving from 6% down to 3%.  This change will be posted sometime in February and will have an effective date in the early summer.
Bottom line note from Tom: as a buyer’s agent, this is HUGE!  I’ve had several cases over the past year of negotiating a 5-6% credit from the sellers.  If 3% is the new maximum, it’ll be harder to negotiate with the seller to lower the up-front cost of the home purchase.

 And don’t forget the TAX CREDITS that are set to expire in April!  So, to briefly recap why you need to MOVE NOW if you’re thinking of buying a new home in the coming year:

 Here’s what you can currently take advantage of:

 *  TAX CREDIT OF $6,500 to $8,000 for repeat *and* first time home buyers (if qualified).
*  The seller can pay up to 6% of the sales price of buyer’s closing costs. 
*  Upfront MIP is 1.75% (half a percent lower than it will be)
*  No minimum credit (FICO) score currently (with lenders usually requiring 620). 
*  FHA allows Non-Occupying co-signers for income only.  (FHA loans are the only loans that allow a relative to co-sign for the borrower and do not require the borrower to have any source of income.) 

I know this is a lot to digest, but I wanted to make sure all my friends have all the facts about the current market for real estate.

 Questions? Simply reply to this email or call us at 301.785.5889 today.  We’re here to help!

 (And thanks for making it all the way to the end of this important message!)