Big Changes to FHA loans...MUST READ!!!

Changes in FHA loans that begin with all new case numbers assigned on or after April 1st (this is not an April Fools joke!)

• The Up Front Mortgage Insurance premium is increased from 1% to 1.75%. This means for every $100,000 that you borrow, your loan amount will be $750 higher than it would have been prior to April 1st. At current rates, this equates to a payment that is higher by about $3.47 per month for every 100K borrowed.


• Monthly PMI (Private Mortgage insurance) is also increasing April 1st. The annual PMI on a 30 year FHA loan is increasing from 1.15 basis points to 1.25 basis points. This means for every 100K you borrow, your monthly PMI payment is now $8.34 per month higher than FHA loans prior to April 1st.

This means if you are financing a $200,000 loan on FHA terms for 30 years, your payment after April 1st will be $23.62 per month higher than if you buy (or lock in) before April 1st. That is almost $300 per year. This can, and will make a difference in buyer perception of FHA loans, as well as the buyer ability to qualify regarding debt to income ratios.

....BUT THE BIGGEST NEWS.....FHA mortgagee letter 2012-3, which can be found here: http://portal.hud.gov/hudportal/documents/huddoc?id=12-03ml.pdf

If a buyer has more than $1,000 in collection accounts (aggregate total), those collection accounts must either be paid in full at closing with the borrowers own funds, OR the buyer must enter into a payment program and the lender must document 3 months payment history. Those payment plan debts must also be added into debt to income ratios.

This news is HUGE and we expect it to impact and disallow qualifying on up to 30% of current FHA loan applicants towards the lower end of the FHA credit requirements. FHA loans were designed for individuals with more of a bruised credit profile, and this will have a major impact on FHA business. At a time when the housing market is showing signs of life, and all politicians agree that we need housing to help get us out of the recession, we are hit with this. It makes no sense to do this at the current time, but yet here we are.

REALTORS...PLEASE MAKE SURE THAT YOUR BUYERS ARE GETTING PRE-APPROVED FROM KNOWLEDGEABLE, QUALIFIED LENDING PROFESSIONALS. If you have any questions please do not hesitate to call us.

Adam Simmons

Owner

Crystal Clear Mortgage, LLC

15320 Hwy 105 W Suite 206

Montgomery, TX 77356

936-447-5626 direct

888-634-6911 toll free

www.CrystalClearMortgage.com