New FHA Changes

A loan officer in the Cleveland area, Jim Cook sent me an interesting bit of news and I wanted to share it with you. It's regarding FHA and how new negative changes could impact your home loan in the future. The Housing Rescue Bill that has passed Congress has two changes to FHA loans. Here's what he sent...

• The new FHA changes will eliminate Seller Funded Down payment Assistance Programs (DAP’s) like AmeriDream, Nehemiah, etc. While I would expect those organizations to challenge this, I’m not as confident that they’ll prevail.
• The minimum down payment on an FHA loan will increase from 3% to 3.5% of the sales price.
  

I don’t have the implementation date for these changes, but there isn’t usually much of a lag time. I would STRONGLY encourage you to share this information with your prospective buyers. The seller funded DAP’s could be eliminated overnight. Buyer’s need to move quickly to make sure they’re in the pipeline when this change occurs.

It is also important to immediately start counseling prospective buyers on the resources that may still be available to help them:

• Cuyahoga County Grant/DAP, local community Grant/DAP’s (i.e. Parma, Lakewood, etc.) and the OHFA (Ohio Housing Finance Agency) 3% DAP. All of these have income limits, and pre approval is a MUST.
• Church or faith based groups.
• Community organizations that help with home buyer education and matching funds for home buying savings accounts.
• Family. This used to be the number 1 resource for new home buyers. The proliferation of the other types of programs created almost an entitlement mentality where prospective buyer’s were offended when we mentioned “get a gift from mom and dad”. Well, that’s going to be one of the first questions Loan Officer’s will be asking again.

What's the best way to tackle these new FHA changes and prepare for the future market and ways of buying a home? Prepare to put down 3.5% of the purchase price on your home. No money down loans are harder to come by unless you're buying a HUD home. Start saving and know which programs are out there that can help you or assist you with a down payment. The best way to learn about FHA or to get pre-qualified for a home loan so you know where you stand is to contact a local, reputable loan officer in the Cleveland area who is familiar with FHA and all programs.