FHA Done Good

Hello People.
The FHA loan program is trying to make some changes in policy. These changes have to be done because FHA is getting beat up with bad loans and they are running out of loot. If they get much more out of pocket they will have to raise the minimum down payment of 3.5%. But don't worry, the changes shouldn't be too painful.
First up, they want to change the up front mortgage insurance premium or UFMIP (Sounds like you got drunk after coming from the dentist and happened to have a mouth full of marbles while saying......fill in the blank) from 1.75% to 2.25%. That's a percentage of the loan amount. On a $300,000 loan your UFMIP will go from $5250 to $6750. It hurts but not as much as the furniture you'll buy. And when you see that the walls look so old next to the new furniture you'll have to paint. Then the floors. Then the kitchen. Then the bath rooms. On and on until it's time to buy new furniture again. You'll never miss it in the long run.
B. New borrowers will have to have a credit score of at least 580 to qualify for the 3.5% down payment or they will have to fork over a 10% down payment. Guess what, most lenders do not care what FHA says. They don't give FHA loans to anyone who has under a 620 credit score, some are going to 640 (you might be able to get an FHA loan with a 600 fico but the rate will suck). If you have a credit score under 580 and someone gives you a loan you better pay him or he'll brake your legs.
III. Seller credits to the buyer go from 6% to 3%. Who cares! It's very rare that you can get into a home where the seller give you a full 6% towards closing cost. If you buy a $300,000 (I'm stuck on that #) and you get a 6% seller credit either the seller comes out of his pocket $18,000 or it's really a $282,000 place and now it wont appraise.
And lastly, they will increase enforcement on FHA lenders. I don't know if that means surveillance or espionage or beating the crap out of some mortgage lender who didn't fill out the FHA paperwork correctly. But, I'm glad they're doing something.
Again, if these changes go through they will be good. They will keep the FHA program going so it can continue to do loans. They currently account for approx 1/3 of all U.S. loans. That would really blow if they went away because they ran out of cash or had to raise the minimum down payment from 3.5% to ???.
Check out what HUD has to say about it by clicking the title.
God Bless.