FHA Mortgage Insurance Premiums Set to Rise

The Federal Housing Administration has announced that on April 18th they will be raising the Mortgage Insurance Premiums on the their loans. If you are thinking about purchasing a home and getting FHA financing you will need to be under contract on the property you are interested in with an active loan application by April 18th. The time frame gives buyers the next month to find the home they are interested in and make an offer. Buyers who wait until after the 18th are likely to see higher monthly payments due to the rate increase. For more questions on FHA financing in Boston you can call our office at 617-449-3642.

FP3 Set to Announce FHA Financing

FP3 the newest loft building in the Seaport neighborhood is set to announcing any day that they have been given FHA approval. So what does this mean for you? Quite simply you can move into the newest building in the Seaport with a down payment as little as $12,000. This will certainly be a major boon to those first time buyers that are looking to buy a place in the city, but with only a few weeks left before the tax credit deadline they will have to move quickly. For those that are interested, FP3 does have 16 studio condos still available all priced from $319,000-$399,000.  To see what you can get for $12k take a look below:

For more information on FP3 take a look at our luxury building page. If you’re interested in scheduling a showing call 617-449-3642.

FHA Raises Loan Standards

Today the FHA is set to announce that it’s raising its standards for the loans it’s willing to guarantee. The new guidelines have a few big changes, but the one that will impact everyone, is the rise in initial insurance premium paid. In the new guidelines, the amount of MIP (Mortgage Insurance Premium) paid will rise from 1.75% to 2.25% of the value of the loan. Additional restrictions now include: the seller’s ability to help pay closing costs and minimum credit score for down payments. The new loan guidelines say the maximum amount of closing costs that can be paid by the seller is now 3% reduced from 6%. There will also be a credit score requirement in order to get the attractive 3.5% down payment. Borrowers will need a credit score of at least 580 if they want to put only 3.5% down. So what does this all ad up to?

If you’re thinking about buying in the next year it would be best to do it sooner rather than later. The tougher standards for FHA loans won’t impact most people’s ability to get an FHA loan, but it will cost you more to get one. It’s best to try and get any potential purchase done before these new regulations kick in rather than waiting till later. The other reason to buy now rather than later, is rising interest rates. Below, I’ve included a graph of interest rates in Massachusetts for the past month. In this graph, you’ll notice that mortgage rates are on the rise. As of today the average for a 30-year fixed is higher than it was a month ago and if you think back to November rates were right around 5% or for some, below 5% you can see we’ve had quite an increase.

Don’t get caught paying more later than you would if you bought today!

10 Reasons Why You Should Help Your Kid Buy a House this Year

Here are the top 10 reasons to help your kid buy a home this year.

1. How else could you take advantage of the low down payment possibility that FHA offers?

One of the things that’s so great about FHA financing is that it only requires a down payment of 3.5%. This is great news for both you and your kid, incase neither one of you has a lot of extra cash on hand. Obviously, the more money you can put down the better, but it’s not necessary with this kind of financing.

2. Low fixed rates on old fashion 30-year mortgages.

Mortgage rates have climbed from their record lows a few months ago, but many remain in the mid to low 5%. Parents, do you remember what your first mortgage rate was? Rates this low make home ownership a reality for many people who are simply throwing away money by renting a place.

3. FHA financing finally has limits high enough that you can get your kid a nice starter property.

It’s important to keep in mind that this is a starter home; it doesn’t need to be Tom Brady’s Mansion. The current FHA loan limit for Suffolk County is $465,000. This means that you can look at homes for roughly up to $490,000. For those of you doing the math right now that means you give roughly a 95% offer on a $490,000 and still fall within the loan limit. In today’s real estate market, I know many sellers that would be quite happy to receive that kind of offer.

4. First Time Homebuyers Tax Credit of $8,000 is good through the end of the year.

The credit is available to those who are first time homebuyers between January 1, 2009 and December 1, 2009. The tax credit is just the beginning of the tax advantages to buying a home this year. To lower your taxes further, you can also deduct the interest you pay on your FHA loan.

5. You can gift the down payment to your kid and not pay any taxes on the money.

Parents can gift their children up to $12,000 each, without paying any taxes on the gift. The father can give $12,000 and the mother can give $12,000. This means that you can give your kids $24,000 to put towards the down payment which is well above the 3.5% minimum that’s required by FHA loans.

6. You can ask for closing costs as part of the offer!

Closing costs can sometimes be a huge expense and one that many people often forget about at first. FHA loans allow for the seller to pay up to 6% of the closing costs related to transaction. This is usually enough to cover all costs associated with the purchase of the home.

7. You can take advantage of dropping interest rates even after you’ve closed.

FHA loans have the ability to easily be re-written if rates drop. This means you never have to worry about being locked into a higher rate if interest rates ever drop down further.

8. There are plenty of properties to choose from! The current market is filled with properties that fall within FHA pricing guidelines.

A quick search of just 3 Boston neighborhoods currently show almost 200 properties that fall under the $490,000 price point. When you expand the search to include a few more neighborhoods, the number of homes increases to well over 300.

9. For recent college grads, you can use your school as a previous employer.

One of the most difficult parts of getting a mortgage for recent college grads is the 2 year work requirement. Many are just starting their careers, but with an FHA loan you can use your school to fill the 2 year work requirement.

10. Real Estate has always been a path to creating wealth, so why not start your kids early?

Every financial guru out there will tell you that the creation of long lasting wealth starts with real estate. Over a long period of time it’s one the most stable and in some cases profitable places to invest your money. My favorite quote on the matter: “Buy land, it’s the one thing they aren’t making any more of. A prime example of this is the parking space in Back Bay that recently sold for $300,000. This undeveloped 8′ x 17′ piece of land that years ago was worth nothing, has now set a record in Boston.

For more information on FHA loans or for help looking for a property that meets these guidelines, feel free to contact me via email.