March 31st, 2010 6:36 PM by Diego Quintero
If you are considering a new home or an upgrade, you must take advantage of the current market conditions. In the upcoming months, the Federal Housing Administration (FHA) is seeking to make some pricey changes to home buying, so the timing could not be better to contact your local real estate agents.
In order for the FHA to improve their financial position, they are increasing the mortgage insurance premium from 1.75% to 2.25%. What is mortgage insurance? Simply stated, it is an insurance policy that will protect the lender in the event that the borrower cannot make payments.
FHA assistant secretary of housing David H. Stevens explained the need for mortgage insurance to Congress on March 11: "This assistance allows lenders to make capital available to many borrowers who would otherwise have no access to the safe, affordable financing needed to purchase a home."
In addition to insurance increases, some home buyers might see the minimum down payment increase from 3.5% to 5% or even 10%!
Also keep in mind the tax rebate we’ve blogged about for first time home buyers and ‘step-up’ buyers. There is still time to benefit from this offer. For additional tax facts, you can review your IRS info. As always, consult your CPA or attorney to make sure that you are filing your taxes correctly.
Interest rates are still at all time lows, as are home prices at rock-bottom. Plus, the rebate is still in effect, so it simply makes sense to buy your own place or step-up your lifestyle as the buyer’s position is near perfect.