FHA/HUD recently issued a news release announcing policy changes which would greatly affect many FHA buyers. Normally, a first-time homebuyer purchases with an FHA insured loan, because they qualify easier and with a lower down payment, which can be gifted. This helps a buyer to get into a home and start building equity sooner, when funds on hand are limited. As part of these changes made by HUD, the MIP, mortgage insurance premium, will increase from 1.75% to 2.25%. Also, the allowable seller concessions has been cut from 6% to 3%. These are major changes! With the tighter underwriting guidelines, it is most important that the consumer be aware of their credit scores and make every effort to keep credit cleaned up. Also, saving as much as possible. There will have prepaid costs, along with the down payment. One of my services to homebuyers, is to make sure they understand the entire process. Before looking at property, contact a mortgage loan officer to be sure you are in the best position to purchase.
Real estate property is still the best investment one can make. Sometimes we have to see the picture realistically. What we want and what we qualify for, are at two different ends of the spectrum.