FHA Changes – What they mean for the Charlottesville real estate market

I’m not a mortgage broker or a lender in Charlottesville, but I know folks who are.

Guest post by Matt Hodges with Compass Home Loans:

FHA has picked up much loan volume that the sub-prime world vacated – so much so that for every ten new purchases, FHA insures three. This isn’t to say that FHA isn’t a great product – it is. I’ve used it for eleven years, but it’s now sustaining losses for which the up-front Mortgage Insurance Premium (UFMIP) is paying. The UFMIP helps to pay future claims on bad debt, i.e. foreclosures of FHA insured loans.

FHA tells us it’s time to pay the piper. For all new case numbers (FHA’s mechanism to keep track of loans they insure) assigned on April 5, 2010 or later, the UFMIP will increase from 1.75% to 2.25%. While this isn’t a huge change to qualifying standards, it does show that FHA is looking at underwriting standards a bit closer and refilling their coffers. If a new FHA loan was originated for $100,000, currently the total loan amount with UFMIP would be $101,750. On April 5th, it will become $102,250.

To be implemented in the summer, FHA proposes to change down payments for sub-580 credit score borrowers from 3.5% to 10%. Most lenders won’t touch a sub-620 score for FHA right now, so I don’t see an immediate problem with this either. This is potentially beneficial for FHA, as it will provide additional equity in the case of foreclosure, mitigating losses.

Probably our biggest concern right now is the proposed change from 6% seller concessions down to only 3%. But, Matt, you argue, 3% is a lot of money for the seller to pay. It might be at a $200,000 loan, but at $100,000, most borrowers will expend at least $3000 in closing costs, pre-paid items and points. Remember, FHA is the loan for those who are cash-strapped.

For more detail on all three changes, review HUD’s release.

More often than not, FHA borrowers come to the table with just over 3.5% required down payment. If HUD removes the ability to get seller concessions at the lower loan amounts, they will be directly affecting the housing recovery and effectively be discriminating against poorer borrowers, who can only afford lower priced homes.

Virginia is considered a “high-cost” state, meaning closing costs are relatively higher than other states. Perhaps HUD can modify this proposed rule to accommodate for different loan sizes in different states and make the program continue to work. This is your time to voice concerns for or against this rule change NOW while HUD welcomes your comments.

So, what does this mean for homebuyers in Charlottesville?

It means that buying a home in Charlottesville – with an FHA loan – is going to get a bit more expensive, and is another reason that I have been advising clients – both buyers and sellers – that if they choose to buy or sell now, time is of the essence. For some, $1000 may be a make-or-break number.

Right now, for the Charlottesville MSA the FHA loan limit is $437,000 for single-family homes, so this affects the most crucial segment of the Charlottesville real estate market.


More:

- Upcoming Changes to FHA Home Loan Guidelines = Higher Costs to Home Buyers
- FHA Changes Make FHA Loans More Expensive
FHA Guidelines Scheduled to change this Spring and Summer

Print Friendly

About Jim Duncan

Father, husband, Charlottesville real estate agent, bicycle rider & soccer coach. And more. Lots more.
This entry was posted in Buyers, Charlottesville, General Real Estate and tagged , , , . Bookmark the permalink.
  • loy man

    Rodgers : Liverpool Menyimpan Permainan Menyerang Yang Bahaya

    Berita terbaru dan terkini dari agen bolacity holiday – Manajer Liverpool, Brendan Rodgers, mengakui bahwa pertahanan The Reds memang rentan kebobolan karena mindset yang terlalu ofensif.

    Agen bola city holiday Terpercaya – Hal tersebut terbukti semalam dalam laga melawan Cardiff City (22/03). Meskipun mampu mencetak enam gol, namun gawang Simon Mignolet juga kebobolan sebanyak tiga gol .

    “Memang itulah resiko yang kadang harus kami ambil. Bagaimanapun tim terbaik tetap bisa kebobolan,” kata pria asal Irlandia Utara ini.

    “Semua orang yang melihat permainan Liverpool hari ini melihat betapa mengancamnya lini serang kami. Kami mampu melakukan hal luar biasa saat menguasai bola.”

    Sumber http://www.cityholidaybet.com/

  • Quess 11

    Queiroz believes in Iran to bring success in world cup

    Well-known Agen Bola Indo11.com revealed, According to Iran coach Carlos Queiroz, his men are desperate to defy the odds, and cause a surprise at the 2014 World Cup in Brazil. However, Iran is broadly believed to find it hard to beat its opponents: Argentina, Bosnia and Nigeria in Group F.
    Iran is going to start its world cup’s first game against Nigeria on June 16. The former Portugal boss said Iran is motivated to vindicate their qualification to the finals.
    The coach said: “As we came from the other side of the world we arrived earlier to start our preparation. We have earned the right to play against the best and now it’s time to do it. We have 90 minutes in each game and we will use them the best possible way.”

  • Wasignton 11

    Sabella feels surprised by great attackers

    According to Argentina coach Alejandro Sabella, he is excited by the potential of his attacking players at the 2014 World Cup in Brazil. The squad included Lionel Messi, Gonzalo Higuain, Sergio Aguero and Angel Di Maria. Brazil will face Iran, Nigeria and Bosnia-Herzegovina in Group F.
    Sabella said: “There are some great players in this team, most of all the forwards. Lionel Messi, Gonzalo Higuain, Sergio Aguero and Angel Di Maria … with them you are enthusiastic, I can’t deny that even I am. Every fan is excited by the prospect of watching these players when they are in form.” As revealed by trustworthy Agen Bola indo11.com
    For Sabella, Messi feels well with Argentina’s squad and is delighted with his teammate. He added: “I can see that Lionel Messi is in good shape, happy and willing to work with all of us in order to have the best World Cup.”

  • Aesd 11

    Switzerland on the right track ahead of world cup

    According to Switzerland coach Ottmar Hitzfeld, Switzerland is confident and well-prepared ahead of the FIFA World Cup after their win over Peru on Tuesday. His nation will face France, Ecuador and Honduras in Group E during World Cup.
    The coach said: “I am pleased that we have won. At the beginning of the game was felt among the players the fatigue of the nine-day training camp. Finally, we have but the game deserved to win.
    We have trained hard and set a good base. The fact that we have won twice is good for morale. We are on the right track.” As revealed by trustworthy Agen Bola indo11.com
    He added: “It’s fantastic to see that (such a) defender as Lichtsteiner score a goal. He not only has erased many fires back, but made a wonderful goal.”

  • http://www.realcentralva.com/ Jim Duncan

    Spam—
    Sent from my phone. Brief by necessity.

    RealCentralVA.com
    434-242-7140

  • http://www.realcentralva.com/ Jim Duncan

    Spam —
    Sent from my phone. Brief by necessity.

    RealCentralVA.com
    434-242-7140