Unless Congress takes some action the FHA Conforming loan limits will drop from $729,950 to $625,500 by October 1st. Banks however are already starting to take action and if you are currently out looking you may want to try and get into contract by the end of the month as that is when several banks will stop accepting as conforming loans in the $625,500 to $729,950 range. This will result in the costs of financing going up by about 3/4 points significantly increasing monthly payments.
When deciding between getting an FHA approved loan or a conventional loan there are many factors that go into this decision. The primary ones in the past have been
The FHA is increasing the amounts required for Mortgage Insurance Premium from .9% to 1.15% as of April 18th on 15 yr and 30yr loans. So if you want to purchase a home and not pay the additional increased costs you will want to have your purchase agreement ratified by April 18th 2011.
The real estate market has been tough enough this year with the banks tightening up their credit guidelines for borrowers, owners not wanting to lower prices to market, and buyer wanting unrealistic foreclosure prices, but now things have gotten even tougher for us professionals. We now have to qualify not only our borrowers but the buildings that they are considering. Some of the potential deal killers for first time buyers seeking FHA, Fannie Mae or Freddie Mac approved bank loans are:
New regulations and government changes are going to increase the costs of loans.
FHA Premiums Are Going to Increase. The Federal Housing Administration (FHA) is raising annual mortgage insurance premiums by an additional .25% on new 15 and 30 yr loans after April 18, 2011. For 30 year loans this means the total premium will now be 1.15% from .9% if the Loan to Value ratio is higher than 95%.
FHA is Lowering The Maximum Loan Amount. The maximum amount that can be insured by Fannie, Freddie or the FHA is scheduled to drop to $625,500 on Oct 1, 2011 from $729,750. This means less people in states with high property values will be able to obtain affordable FHA loans.
Greg Bryan is a realtor and an attorney in San Francisco
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