Starting Monday, April 5, 2010, getting an FHA mortgage in Houston and nationwide will be more expensive for borrowers.

In new guidelines set forth earlier this year, the FHA announced plans to raise additional revenue and reduce the overall risk of its mortgage portfolio.

The changes include the following:

1. Increase Upfront Mortgage Insurance Premiums from 1.75% to 2.25% for everyone
2. A plan to reduce seller concessions from 6 percent to 3 percent
3. An increase in minimum downpayment for FICOs 580 or lower

For your own loan, to avoid being subject to higher loan costs, make sure to have your FHA Case Number assigned prior to Monday, April 5, 2010.  That means you’ll want to give a full mortgage application before the weekend so your lender can register your loan in time for the deadline.

But don’t leave your application to the last minute.

Friday is Good Friday so most banks will be closed. Your true FHA deadline, therefore, is Thursday April 1.

Also worth noting is that the FHA isn’t done with its changes.

In its policy statement, the group also announced its plans to petition Congress to raise monthly mortgage insurance premiums.  The FHA’s formal request, in summary:

1. Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
2. Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It’s merely a request. And in the event that Congress does approves it, the FHA reserves the right to change its projections.  Either way, it means higher costs for consumers.

The best plan, therefore, is to get your FHA mortgage into underwriting ahead of the switches because borrowing money will be harder, and more costly.

FHA changes UFMIP to 2.25% and Down Payments are being increased!

If you recall, I have been writing about my outlook on FHA changes for a while now, and folks, I wasn’t that far off.

The Federal Housing Administration has been in some financial trouble due to other types of financing being unattractive, and because of all the rising defaults due to the job market, FHA’s tightening up.

Now this is going to take some time to get passed down through the funnel to the investors (banks/lenders), so I am not sure of when the changes will be effective, but take this a forewarning, and also, A HEAD START TO PREPARE. When it does go into effect, I will be the first to let you know.

In this morning’s mortgage bond market, we are up 16 bps and we’re hedged between both levels of resistance, as the FNMA 30 Year 4.5% coupon is currently being sold at $100.78.

Here are the results from today’s reports:

1. Producer Price Index (PPI)- 0.2%
2. Core Producer Price Index- 0.0%
3. ICSC-Goldman Store Sales- 2.0%
4. Housing Starts- 557K

Have a great day, and I’ll be back with any significant changes!

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Can you imagine being 2 weeks into the process and your part-time Loan Officer calling and saying, “Hi Bob… um, we have a little issue?”

In our information age, you need what you want, and you need it NOW- but not so fast, Charlie.

What we see (and later save), day in and day out, is inexperienced Loan Officers wanting to get the “deal” in faster than they can ask your name, only to realize that they forgot to ask you that one “deal-killer” of a question at the beginning, and now everyone is out of time, and money- but has plenty of frustration.

So to ease everyone’s minds, we are here to help and want you to know that we have our fingers on the markets, the economy, rates, and guidelines; but most importantly, we are here to GIVE YOU CORRECT AND INFORMED ADVICE ON ALL FHA LOANS.

So with that being said, here’s the scoop on the new change in FHA guidelines:

As of October 1, 2008, all Up Front Mortgage Insurance Premiums (UFMIP) for purchases and full-credit qualifying refinances will be 1.75%.

For streamline refinances, UFMIP will be 1.50%.

For all FHASecure, you are looking at 3%.

As for the MONTHLY mortgage insurance premiums, as they have had some slight changes as well, but nothing too major.

Here is the link directly to HUD Memo detailing these changes:

FHA GUIDELINE CHANGES

As always, we’re here to help and welcome any questions you may have!