Act Now To Beat FHA Changes

Those who act quickly can beat the timing of these FHA changes outlined by the Wall Street Journal. Contact us for information on getting the process started and find out if there are alternatives that will help you purchase or refinance without using the FHA program.

In an effort to make up for a large budget shortfall, the Federal Housing Administration announced it will publish new standards for certain home owners and replace a popular reverse-mortgage program on Jan. 31, 2013. As among the changes, borrowers with credit scores between 580 and 620 will face stricter underwriting standards. Such borrowers will face stricter limits on their debt-to-income ratio.

The FHA also will soon require a minimum down payment of 5 percent for high-cost loans that exceed $625,500. FHA also plans to suspend its popular reverse-mortgage option, which allows those 62 years and older to take cash out of their homes in a big, upfront payment, The Wall Street Journal reports. FHA will be replacing it with the Home Equity Conversion Mortgage saver, which offers lower cash payments than the large upfront payment of the other program.

The changes are part of an effort to make up for a $16.3 billion deficit FHA faces. The FHA reverse program alone accounts for $2.8 billion of those losses. Last month, the FHA also announced it would increase insurance premiums. Source: The Wall Street Journal