FHA Financing may be getting an overhaul

By
KC Haririan, Lender
Published: January 22, 2010Posted in: FinanceTags:

The Federal Housing Administration (FHA), an agency of the federal government, insures private loans that are issued for new and existing housing, and loans that are approved for home repairs. Created by congress in 1934, the FHA became part of the Department of Housing and Urban Development’s Office of Housing (HUD) in 1965. Today the mission of the FHA includes helping borrowers get amounts they qualify for, and assisting lenders by reducing their risk in issuing loans.

Up until a few years ago, FHA loans only represented a very small percentage of all mortgage loans, but with the crash of the sub-prime market and housing crisis, this loan program has become more and more popular to the tune of almost 50% of all loans being originated today.

With popularity, comes added risk and restrictions. FHA is evolving and requirements are getting tougher. Yesterday (01/21/2010), the HUD announced the most recent change to FHA’s upfront Fee (MIP). Effective for FHA loans for which the case number is assigned on or after April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25 percent (compared to 1.75 percent today). This policy change will increase premiums for purchase money and refinance transactions, including FHA-to-FHA credit-qualifying and non-credit qualifying streamlined refinance transactions.

There are some rumors regarding further modifications to FHA loan requirements that may be coming down the pipe soon:

• Down Payment Requirement going from 3.5% to 5.0%
• Minimum Credit Score requirement going from 620 to 660
• Seller Concessions (closing costs) going from 6% to 3%

If you are considering buying a home for the first time, please keep in mind that the longer you wait, the harder it might be to qualify for the mortgage. Also, the $8,000 tax credit is set to expire on 4/30/2010.

About the Author

KC Haririan, Lender KC has access to the best loan products available in the industry. What makes KC's job rewarding is his willingness to go above and beyond the call of duty in making the loan process as smooth and efficient as possible. KC has been in the financial services industry since 1996 helping his clients with a variety of needs such as investments, mortgages, insurance, and other financial products. KC received his CERTIFIED LOAN OFFICER® designation from the Mortgage Bankers Association of Alabama in 2005. KC is a graduate of Auburn University with an MBA in Finance. KC’s drive for excellence and his years of experience, combined with a desire to help others, create a unique opportunity for clients who are looking for a trusted advisor for their mortgage needs. His technical expertise allows him to offer financial solutions that are correct and practical. KC has the heart of a teacher and enjoys working with people; especially first time homebuyers. KC's goal is to be the best Christian husband, father, and a friend he possibly can. KC and his family have been attending Church of the Highlands for the past three years. He is very involved in serving at the church - AND HE LOVES IT!