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New FHA rules
Posted: Administrator on Feb 16 | Headlines
Getting a home loan or refinancing your existing home will require a better FICO
score than before. The Federal Housing Administration is trying to limit its
exposure, and our nation’s, to bad mortgage debt and therefore, implementing
tighter controls for lender approval. Below are the 4 major highlights of the new
FHA rules.
It’s anticipated that these rules will go into effect in the spring or early summer of 2010.
Higher insurance requirements – this change requires that an upfront mortgage insurance
premium required of a borrower would be raised from 1.75% to 2.25%.
Larger down payment – only those borrowers with FICO scores about 580 would qualify
for the low 3.5% down payment. Those borrowers with a score lower than 580 would need
a down payment of at least 10%.
Lower seller concessions – this is the money returned to a borrower in exchange for
agreeing to a higher home sales price. This seller concession would drop from 6% to 3%.
Higher minimum FICO score requirements – in addition to needing a minimum FICO score
to qualify for the lower down payment option, it may be difficult for a borrower to even
begin the process with FICO scores below 600. This higher FICO score requirement is not
limited to FHA loans, but is being adopted throughout the mortgage industry; what was
once a fair FICO score may now only be considered a poor score. source: www.myfico.com
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