The Federal Housing Administration (FHA) helps new homebuyers everywhere, even in California. FHA premiums are going down in 2015. The FHA was started in 1934 to help first-time homebuyers purchase a home. FHA.com states, “The FHA provides mortgage insurance on loans made by FHA approved lenders.” When the mortgage industry took a hit, and the ‘bad loans’ were discovered, the rate increased steadily up to 1.35%.
According to FHA.com, the Obama administration has made it a goal to bring this rate back down by the end of January 2015. By bringing the rate down, it is expected that 250,000 first-time homebuyers will get new loans over the next 3 years! The rate is expected to drop to .85% by the end of the month.
The FHA does have specific guidelines to be approved for an FHA backed loan. Credit guidelines include: having 2 lines of credit open and active, you can have a Ch. 13 bankruptcy if it is current (a Ch. 7 Bankruptcy is also ok if it is at least 2 years past the discharge date), some late payments on your credit is ok as long as the overall payment pattern is good, foreclosures will prevent you from getting a FHA backed loan unless it was extenuating circumstances, and judgments will need to be paid prior to closing. The FHA has specific lending limits based on the type of home and the state it is in. The closing costs allowed are determined by each local office, and a list of the allowed costs can be found here. The FHA will review your debt to income ratios to determine the amount of loan that you can afford. This is to set you up for success so that you don’t buy more house than you can really afford to pay for.
With the rate dropping along with the mortgage interest rates, new loans and refinancing numbers will be high. Now may be the time to start looking for a new home! Contact me for a loan officer recommendation. We at Haylen Group are here to help you with all of your real estate needs! If you are unsure what your options are, call Helen Chong at (408) 800-LIST or email at Helen@HaylenGroup.com. You can also visit us at our website for available listings and additional information.