Scott Strang

Financing Alert! FHA Tightening Policies

Buyers May Not Qualify after January, 2010 ? Credit Scores Increased to 693

The Federal Housing Administration will tighten credit standards and implement new rules for appraisals on Jan. 1, saying a study to be published in November is expected to show FHA's capital reserve ratio slipping below mandated minimums.

FHA's insurance fund is sufficient to cover future losses, Federal Housing Commissioner David H. Stevens said, but the tighter policies will ensure that the loan guarantees remain self-sustaining and continue to be funded by premiums paid by borrowers, not taxpayers. The new policies also include guidelines for ordering appraisals that are intended to protect appraisers from pressure by lenders.

FHA is also placing new requirements on streamlined refinancing, payment history, income verification, and demonstration of net tangible benefit to the borrower. Borrowers must have made at least six months of payments in order to qualify under the new requirements, for example.

All in all, the tighter credit policies, along with an increase in average FHA credit scores over the last year from 633 to 693, will help reduce losses, ensuring that claims on FHA loans don't exceed premiums paid by borrowers, HUD said.

The U.S. House of Representatives this week passed legislation intended to help FHA combat fraud and lax underwriting by hiring additional staff and upgrading its technology. The bill was a response to fears that increased demand for FHA-backed loans is taxing the FHA's capabilities to oversee lenders, making the program more vulnerable to losses.

What does this mean for potential borrowers? It means that there is no better time than the present to buy a home. This particularly applies to 3.5% down borrowers. Historically low rates, low prices and lots on inventory. It's a no brain-er !!

Tired of you house not selling?? Sick of your agent ??? Don't want to deal with costly moving expenses?? There is now another option. Just torch your house and leave.

I am making light of this but this is an actual story that happened with this 1.45 million home in Newbury MA. Sad but true:

http://www1.whdh.com/news/articles/local/BO124140/

http://www.newburyportnews.com/punews/local_story_253231058.html

"She was sick of the house quote, unquote, and she left the house to burn," said Maura Bailey, Assistant District Attorney.

"Ms. Moore told officers she had burned it down," prosecutor Maura Bailey told Doyle yesterday. "She said she was 'sick of the house' and wanted to 'let it burn.'"

The house was on the market for 1065 days. It started at 2.5 million and was down to 1.45 million before it was torched.

This home just posted as sold 07-17-2009. There have been a few homes that have sold in the 700K range over the past few years but nothing this recent.

This is great for 500K+ homes on the Lake. For details on this home with more pictures follow this link:

http://www.nnerenmls.com/nne/maildoc/sd_AAAa004yD20090718145330.html

(link good to Aug 7th, beyond that time frame please e mail me.)

All other Pawtuckaway Lake waterfront listings currently for sale follow the link below:

http://www.nnerenmls.com/nne/maildoc/sd_AAAa0055y20090718152223.html

Check out my listing @ Pawtuckaway @ www.24beachheadroad.com

March 08 compared to March 09: Mortgage Interest rates are down over 1%, Gas prices are down $1.23 per gallon, and median home prices in the Northeast are down $40,000. What does this mean to a buyer every month??? About 376.00 savings per month , see chart below:

This is truly a great opportunity to buy. If you are a first time buyer you will get an 8,000 tax credit next spring that doesn't have to be repaid. There are still many mortgages being written with as low 3.5% down and a 600 fico score. Not to mention, there are more buying options than ever!!!

This Presidents Day:10 Reasons to buy Real Estate

1) Many homes to choose from.

2) A brand new first time buyer stimulus package $8000 Tax credit that NOW DOESN'T have to be repaid. (should be finalized on Tues Feb17th,2009)

3) Rates ranging from 4.875% - 5.5% ...........with this inventory level are you kidding me ???

4) Warren Buffet says "Be fearful when others are greedy, and be greedy when others are fearful." Everyone is fearful now !!!!

5) Unlike a car, Real Estate will appreciate, we have seen a decline since 2005 but long term Real Estate has always been a good investment.

6) Move up buyers will save, example if your condo is worth 200K and you buy a house for 400K and the market is down 10% , you have a "perceived" loss of 20K on the condo but save 40K on the house. Down market = best time to move up buy.

7) Less Realtors are left the business, therefore you have a very select group of true real estate profesisonals that are truly dedicated to the industry and are truly in it for the long term.

8) There is nothing more benificial to the economy than a housing purchase. An average real estate transaction hires 26 people. This cycles much needed money through our economy.

9) As a buyer, you can negotiate a great deal for yourself that often times will include closing costs and terms that are very "buyer friendly".

10) You can get an FHA loan with as little as 3.5% down with a fico score of 600 or better. (just raised from 580)