New Impacts FHA Loans May Have on Homebuyers in 2014
The Federal Housing Administration or the FHA has announced modifications in loan limits that deal with high-cost areas. The real estate industry is experiencing an increase in demand and the FHA has already provided the industry the boost it required. Now that almost all of the objectives have been achieved, the government is not so keen to lend bigger amounts.
The loan limit reduction is going to affect only those homebuyers that are interested in more exclusive properties. Previously, you could have bought a house with less capital, but now you will require more money than you did in the past. If you are planning to become a homeowner in the year 2014, here is what you need to know.
The Mortgage Limits Will Experience a Reduction
The maximum limit on borrowable amounts is hoping to decrease in most regions. On an average, the reduction can be expected to be around $67,000.
Jumbo Mortgages Will Appear Once Again In the Market
A jumbo mortgage is a loan that is based on stricter requirements; you can qualify only if your credit history is good and your debt ratio is less than what a standard FHA loan requires.
As an example, if you have spoiled your credit report because of a short sale or a foreclosure, you can still expect to buy a home again after three years. If you become bankrupt, you can buy property after two years. However, once jumbo loans come into the picture, this would not be possible until seven years have passed. The only exception is when you can pay a down payment of 30% of the home value. In such a case, you can acquire mortgage after two years.
You Will Have To Amend Your Credit Score
Come next year, your credit score must be 700 or higher if you want to qualify for a mortgage. If you want to get the best of all deals, your score must be around 740 or more. Needless to say, before you contact any lender, go through your credit report first.
You Must Pay a Down Payment of at Least 20%
Up till now, a down payment of 20% was actually considered good, providing you with lower rates. Next year, this much down payment would be considered normal. You will get better loans only when you agree to pay increased amounts.
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