FHA Mortgage Loans: HUD Tightens FHA Underwriting Guidelines Today With Minimum Credit Scoring, Reducing Seller Concessions To 3% And Increased Standards For Manual Underwriting

16 08 2010

1. Update the combination of credit and down payment requirements for new borrowers. New borrowers seeking FHA-insured financing will be required to have a minimum FICO score of 580 to qualify for FHA’s flagship 3.5 percent down payment program. New borrowers with credit scores of less than a 580 will be required to make a cash investment of at least 10 percent. Borrowers with credit scores of less than 500 will no longer qualify for an FHA-insured mortgage.

2. Reduce allowable seller concessions from six to three percent. Allowing sellers to contribute up to six percent of the home’s sales price to offset a buyer’s costs exposes the FHA to excess risk by potentially driving up the cost of the home beyond its appraised value. Reducing seller concessions to three percent will bring FHA into conformity with industry standards.

3. Tighten underwriting standards for manually underwritten loans. When using compensating factors in the underwriting process, lenders will be required to consider those factors which are the best predictive indicators of loan performance, such as the borrower’s credit history, loan-to-value (LTV) percentage, debt-to income ratio, and cash reserves.

For more:   http://www.investingcontrarian.com/financial-news-network/update-on-tighter-fha-lending-standards/


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Categories : 203k, FHA, Purchases, Refinance, Underwriting

Kitchen Remodels: Take Time During Design Process To Insure Proper Scope, Pricing, And Written Confirmations From Contractors

16 08 2010

 

• Don’t rush. Take time – from a few weeks to several months, depending on the scope of the project – to meet with pros, browse the Internet and visit showrooms and home centers.

A recent survey of almost 3,000 Consumer Reports readers on remodeling revealed that haste can be costly – respondents who changed their mind after the work got started typically added about $1,500 to the cost of a kitchen project.

• Don’t get stuck on a size. Bloated showpieces are out. The National Kitchen and Bath Association provides guidelines for how much space should be in between appliances, cabinets, and islands.

• Beware of budget busters. When remodeling, leave a 10 percent to 15 percent cushion for surprises such as unexpected structural repairs.

• Get everything in writing. When using a pro for a remodel, the written contract should list each phase of the project; every product, including the model number; and copies of each contractor’s license and workers compensation and liability insurance to confirm that they are still in effect.

For more:  http://azstarnet.com/real-estate/residential/article_7fc92ccc-5741-590b-9c4b-b35f11483bf9.html


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Categories : Contractors, Design, Homes, Kitchen, Remodeling

Mortgage Market Weekly Update: Mortgage Rates Moved Slightly Lower Last Week On Reduced Economic Growth Forecasts And Low Inflation

16 08 2010

Tuesday’s highly anticipated Fed meeting resulted in a policy change which was slightly positive for mortgage rates. This, along with downgrades to economic growth forecasts and continued low inflation, helped mortgage rates move a little lower again last week.

As expected, the Fed made no change to the fed funds rate and left the “extended period” language in place. The Fed also downgraded its economic outlook, saying that the pace of the recovery is likely to be “more modest in the near term than had been anticipated.” In light of this, the Fed has implemented a new policy to purchase additional securities to replace maturing securities from its portfolio, instead of letting its balance sheet shrink. This action will provide a small amount of monetary stimulus to the economy. Even though the Fed will purchase Treasuries rather than mortgage-backed securities (MBS), higher Fed demand for bonds in general supports low mortgage rates.

This month’s most closely watched inflation report showed that inflation is not a concern right now. In fact, some Fed officials and investors are worried that inflation will fall too low. The July Consumer Price Index (CPI) rose 0.3% from June, and increased at a 1.2% annual rate. Core CPI, which excludes food and energy, rose at a slim 0.9% annual rate. The Fed is believed to be most comfortable when core inflation is rising at a rate between 1.5% and 2.0% per year. Low inflation is favorable for mortgage rates.


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Categories : Economic Statistics, Rates, Refinance


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