First, effective  4/5/2010, up-front mortgage insurance premiums will increase from 1.75 to 2.25%. Since this mortgage insurance is usually rolled into the financing, it will not increase the buyer’s cash required to close and would only increase the onthly payment by $11/month on a $400,000 purchase price.

Second, FHA will reduced the maximum closing costs to be credited to the buyer from 6% to 3%. Since 3% usually covers the buyers closing costs anyway, the buyer really will not need to come up with much extra money to cover closing costs. And the buyer is only putting 3.5% down on the loan so they should be able to pay the small extra amount they may need for closing costs.

Please call Marilyn Dashe at Sea Coast Exclusive Properties at 760-803-4304 if you have any questions about these new FHA regulations.

FHA’s anti-flipping rule generally prohibits insuring a mortgage on a home owned by the seller for less than 90 days. That rule has already been waived for certain transactions, including REO’s. Now, beginning Feb. 1st, buyers may use FHA-insured financing to purchase properties resold through private developers and investors.  This one-year waiver will give FHA buyers access to a much broader array of recently foreclosed properties that have been renovated and are now being resold.

Under the temporary waiver, all transactions must be made at arms length and may require additional documentation of improvements and justification of certain price increases. Additional documentation may include a second appraisal and a property inispection ordered by the lender.