(Newswire.net — December 30, 2013) Boise, Idaho —
News reports stating that FHA is reducing its stake in the home loan market does not mean that FHA home loans will be less available, it actually means that FHA loans will be more available. Following the market crash, many new homes for sale that were higher priced or larger properties were left unsold. FHA was needed to underwrite purchase loans for this housing inventory as the alternative was to allow thousands of expensive homes to sit vacant. Many builders would go bankrupt creating additional blight and increasing unemployment. By guaranteeing mortgages for these homes, it prevented the housing construction industry from falling into an even deeper hole.
This change will affect very few homebuyers and only reduces the maximum FHA loan amount from $729,750 to $625,500. The average Boise consumer is not able to afford higher priced homes that fall into the FAH maximum bracket so the recent fear of the FHA changes will have minimal effects on the Boise housing market. In fact, this change will actually benefit the average consumer.
Since the real estate industry is technically still in recovery mode, it is no longer necessary for FHA to stray from its original purpose. The original goal was to guarantee loans for middle class Americans in order to give them an opportunity to purchase moderately priced homes with very low down payments.
Any adult or combination of adults can qualify for an owner occupied FHA guaranteed loan if the following requirements are met.
• The loan payment is equal to or less than 31 percent of the gross monthly income of each borrower and total long term debt including house payment does not exceed 43 percent of monthly gross income.
• Income must be stable and regular for a certain amount of time.
• All borrowers must have good credit.
• Approximately 3.5 percent of purchase price must be available to pay closing costs and down payment.
The real estate market is getting stronger and homes are still available at affordable prices. Today, FHA home mortgage trends in Boise are showing us a healthy real estate market. Affordable homes and low interest rates are readily available. Lower interest rates keep monthly payments more affordable which allows the consumer to pay a higher sales price. As the recovery gains more steam, interest rates and prices will increase. The increases will be moderate but they will still affect homebuyers who wait too long.
There is no limit on the amount of money that will be lent to fund FHA loans because FHA just insures the loan with the FHA Mutual Mortgage Insurance program. Mutual Mortgage Insurance is charged to the borrower and paid as part of the monthly payment. Money to fund FHA loans comes from private investors who like to invest in FHA loans because they are guaranteed. There is no risk of running out of money to fund FHA loans. The recent reduction in loan maximums followed an extraordinary measure by FHA to strengthen the entire economy which was a type of emergency that will not be repeated anytime soon.
Fees for FHA loans can include an appraisal fee, inspection fees, credit report and documentation preparation fees. Sometimes there are other fees but the fees are regulated by FHA and must be what is considered “reasonable and customary” which means that different regions have different customs regarding whether the buyer pays or the seller pays certain necessary expenses.
An FHA approved lender follows FHA underwriting guidelines and other rules. FHA publishes a list of approved lenders and most FHA lenders proudly promote their FHA approved status as they should. All serious buyers should get pre-qualified for a home loan before they submit an offer on a home. FHA approved lenders are enthusiastic about pre-qualifying buyers. Getting qualified now, before interest rates and prices increase is a very good idea.