Times are Changing
There has been a lot of interesting articles in the news lately about the troubles in the mortgage industry. The “crisis” of predatory lenders, raising foreclosure rates, mortgage companies going out of business etc. is certainly news worthy.
Lender’s are changing guidelines as they adjust to market conditions. Many of the programs offered in the past couple of years are disappearing; making it more challenging for some to qualify for a mortgage.
I still see many “zero down” offers from buyers even though articles like this one say they are vanishing. (I wrote about zero down loans in a post from Jan 19th)
My friend, Mark Mattingly, at Allied Home Mortgage recently pointed out some interesting facts about a product that may start to make a “comeback.” That product is an “FHA” loan. You see, I haven’t seen an “FHA” insured loan come in for quite some time. Most borrower’s seem to have been finding better deals and more flexibility from conventional mortgage products. Some of the previous FHA guidelines have been changed to compete with conventional products.
Mark pointed out some interesting facts about FHA loans. For instance:
1. FHA is not a credit score driven product.
2. Mortgage insurance is credit score driven, except when doing a FHA loan. Whether a borrowers credit score is 450 or 850, they pay the same amount for mortgage insurance with a FHA loan, but not with a conventional loan.
3. A seller can not only pay closing costs, but can also gift the down payment to the buyer so the buyer can get into that house for ZERO CASH.
4. In Maricopa county, the loan limit for FHA, $263,150, is higher than the average home purchase price, meaning more than 50% of buyers can do FHA.
5. FHA is not limited to first time buyers.
6. FHA has no income limits like some competing mortgage products.
Time will tell if I see more people deciding to go back to FHA loans. I will continue to stay up on market trends so that I can guide people in the right direction when buying or selling a home. As always, if you need any help or guidance when it comes to buying or selling real estate.. “Just Call Nick!”
