Bid Farewell To Low Costs Mortgages?

25 Oct

Bid Farewell To Low Costs Mortgages?  For years the government guaranteed home loans giving potential homebuyers the push they needed to get into a new home. Now we take a step backwards because it’s beginning to get a lot more difficult.

Everyone agrees that Fannie Mae and Freddie Mac must go. The aim right now is to shrink government-backed loans until they’re relatively scarce. The government has already reduced the loan limits, on a sliding scale nationwide. The current loan limits are $729,750 but will soon top out at $625,500.

So what does this really mean for homebuyers? The most significant change will be the impact on FHA homebuyers.
• Stricter home buying standards
• Higher interest rates
• Higher down payments
• Most potential buyers who once qualified for a FHA loan will be shut out

The largest pool of home mortgages went to FHA-qualified borrowers, who were only required to place three percent down. Without government backing, it’s likely everyone will need a minimum of five to ten percent down. And while the Federal Housing Administration will still be around, guidelines for borrowers will be moving more in line with the private sector.

As everyone has seen, it’s become challenging to acquire a loan because lenders are unwilling to bear the risk. For them to take on more risk, their requirements will change.

The current FHA loan requirements include;
• Two Years of steady employment, preferably with same employer.
• Last two years income should be the same or increasing.
• Credit report should typically have less than two thirty day late payments in last two years with a minimum credit score of 675 or higher.
• Bankruptcies must be at least two years old, with perfect credit since discharge.
• Foreclosures must be at least three years old, with perfect credit since.
• Your new mortgage payment should be approximately 30% of your gross (before taxes) income.

These are some of the most basic of FHA loan requirements. However, the upcoming changes will also affect home buyer’s closing costs. Lenders will undoubtedly ask to charge higher fees to accommodate more risk.

Right now, many fees in connection with a mortgage loan are regulated by the FHA, however, if more loans are backed privately, lender’s will argue that these fees must increase.

The fees that will probably increase include;

• Loan Origination: This fee is usually known as a loan origination fee but sometimes is called a “point” or “points.” It covers the lender’s administrative costs in processing the loan. FHA regulates this fee to a maximum of 1% of the loan amount. Often this is expressed as a percentage of the loan. Generally, the buyer pays the fee, unless otherwise negotiated.

• Credit Report Fee: This fee covers the cost of a credit report, which shows your credit history. The lender uses the information in a credit report to help decide whether or not to approve your loan and how much money to lend you. Typically $50 – $100

• Mortgage Broker Fee: Fees paid to mortgage brokers

• Underwriting Fee: Fee charged by investor for underwriting the submitted loan file and all of its paperwork.

Bottom line – do your homework and seek out the advice of your realtor for financing recommendations.

If you are considering buying or selling property, planning to relocate, looking for Vero Beach homes for sale, or looking for any other information about real estate in Vero Beach, or the surrounding areas, you have come to the right place. This complete Vero Beach real estate resource offers everything you will need: access to property listings with photographs and virtual tours, home valuation tools, and real estate articles to help guide you through the home buying or selling process.  Bold Real Estate Group can assist you with buying, selling or renting a home, find information about Vero Beach communities , schools, real estate market conditions, recreation and much more!

About the Author:  Millie Gil has been a successful Licensed Real Estate agent for over 25 years in Florida.  Millie is Vice President of Bold Real Estate Group, a boutique agency committed to concierge personalized service for discerning buyers, sellers and renters of residential and commercial properties.  For more information please forward your request to

View thousands of new and resale homes:,, a Golf Style Private Community,  a 55+ Resort Lifestyle Community,


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