Many first-time homebuyers turn to FHA loans these days. After all, FHA loans have lower down payment requirements, and first-time homebuyers don't always have a lot of cash to put down. New FHA regulations, while making the business of lending a bit safer for the FHA, will certainly affect first-time homebuyers, who often have lower credit scores and less money.
What is the FHA doing? Specifically, it's making the following changes:
1) The up-front mortgage insurance premium (UFMIP) will be raised to 2.25%, up from 1.75%, effective April 5, 2010.
2) If the borrower's credit score is 580 or below, the minimum down payment will be increased to 10% of the purchase price of the home. Note that if the borrower's credit scroe is above 580, the current requirement of only a 3.5% down payment stands.
3) Sellers can only provide a maximum of 3% in closing cost credits. Previously sellers were allowed to provide up to 6% in concessions (though in practice, this was rare).
Thursday, March 18, 2010
Wednesday, March 10, 2010
New EPA Rules for Remodeling of Pre-1978 Homes
If you own a home built before 1978, there may be lead-based paint present in your home. Granted, you may have been through numerous remodeling projects, and you may have brand new drywall or paneling. However, unless you've had your home tested and confirmed that it is now lead-free, you have no way of confirming whether there is lead-based paint in your home or not.
The U.S. Environmental Protection Agency (the EPA) has issued new rules, which will take effect on April 22, 2010. If you are doing any remodeling work in your pre-1978 home after that date, you may only hire contractors that are certified by the EPA. Specifically, the EPA will be certifying contractors in practices that are "lead-safe". Of course, if the paint in your house is not being touched, then you may use any contractor you wish. However, most remodeling work does require at least some paint or touch-up. Therefore it is most likely you will have to hire a contractor certified by the EPA.
This new EPA rule applies not only to homes, but to schools and child care centers built before 1978 also, so long as children under the age of six are present in those schools and child care centers. However, the new rule does not apply to minor maintenance, or repairs where less than six square feet of lead-based paint is disturbed. If the work is on the outside of the home or school, the rule only applies if more than twenty square feet of lead-based paint is disturbed.
In order to avoid accidental lead poisoning, anyone with a home built before 1978, or anyone who has children in a school built before 1978, should be diligent to make sure that any lead-based paint present in their home or school does not endanger the health of their family!
The U.S. Environmental Protection Agency (the EPA) has issued new rules, which will take effect on April 22, 2010. If you are doing any remodeling work in your pre-1978 home after that date, you may only hire contractors that are certified by the EPA. Specifically, the EPA will be certifying contractors in practices that are "lead-safe". Of course, if the paint in your house is not being touched, then you may use any contractor you wish. However, most remodeling work does require at least some paint or touch-up. Therefore it is most likely you will have to hire a contractor certified by the EPA.
This new EPA rule applies not only to homes, but to schools and child care centers built before 1978 also, so long as children under the age of six are present in those schools and child care centers. However, the new rule does not apply to minor maintenance, or repairs where less than six square feet of lead-based paint is disturbed. If the work is on the outside of the home or school, the rule only applies if more than twenty square feet of lead-based paint is disturbed.
In order to avoid accidental lead poisoning, anyone with a home built before 1978, or anyone who has children in a school built before 1978, should be diligent to make sure that any lead-based paint present in their home or school does not endanger the health of their family!
Wednesday, March 3, 2010
How HAFA Can Help You
If you qualified for a loan modification and were unable to work out a plan you could afford, and you otherwise qualify under the Home Affordable Foreclosure Alternative Program (HAFA), you should know what you can expect for participating in the program.
First and most important, you will have a plan for completing a short sale or deed in lieu of foreclosure. Many short sales languish for months. Often buyers get fed up and walk out of the deal, just waiting for the seller's lender's response. HAFA is expected to speed up the short sale process; prior to listing the property, homeowners will receive pre-approved terms for their short sales.
Second, and also important, you will be released from liability for any portion of the debt that is not paid. In other words, if you bought your home with a $300,000 mortgage, and sold the home for $250,000 in a HAFA-approved short sale, you will not be liable for the $50,000 balance to your lender.
Third, if you are able to complete a short sale or deed your home to the bank in lieu of foreclosure, you will receive $1500 towards your moving costs.
Of course, your bank is not required to sign up for HAFA, but banks that do sign up receive some incentives also. Namely, the bank can get $1000 towards covering their administrative costs. If the bank is a secondary lienholder and agrees to relinquish its lien, the bank can get up to $3000 of government monies through a matching program.
If you are having trouble with your loan payments, look into HAFA to see if you qualify! For a list of criteria to qualify for HAFA, click here.
First and most important, you will have a plan for completing a short sale or deed in lieu of foreclosure. Many short sales languish for months. Often buyers get fed up and walk out of the deal, just waiting for the seller's lender's response. HAFA is expected to speed up the short sale process; prior to listing the property, homeowners will receive pre-approved terms for their short sales.
Second, and also important, you will be released from liability for any portion of the debt that is not paid. In other words, if you bought your home with a $300,000 mortgage, and sold the home for $250,000 in a HAFA-approved short sale, you will not be liable for the $50,000 balance to your lender.
Third, if you are able to complete a short sale or deed your home to the bank in lieu of foreclosure, you will receive $1500 towards your moving costs.
Of course, your bank is not required to sign up for HAFA, but banks that do sign up receive some incentives also. Namely, the bank can get $1000 towards covering their administrative costs. If the bank is a secondary lienholder and agrees to relinquish its lien, the bank can get up to $3000 of government monies through a matching program.
If you are having trouble with your loan payments, look into HAFA to see if you qualify! For a list of criteria to qualify for HAFA, click here.
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