Living in a condo community means the condo board gets to make decisions that affect every owner.
Last week I learned that the condo board in a nice Kirkwood community has decided not to apply to have the community approved for FHA financing. They are probably holding onto the long ago idea that only the young or cash-strapped buyers need FHA financing.
This board, in trying to control who joins their community, has made a very foolish decision. Today, the fee structure of FHA loans often make them a better deal for even buyers who can put down a 5-15% down payment.
Just 3 years ago, only 2% of new loans were FHA loans. In 2009, FHA’s market share grew to 30% of loans for new purchases and 20% of refinancing loans.
Eliminating FHA buyers from your buyer pool might mean that 1 in 3 potential buyers can’t buy your home.
FHA Policy Changes Raises Fees to Buyers:
Buyers who are planning on getting an FHA loan have 1 week left to make a purchase before policy changes will affect their loan.
On April 6, FHA policy changes go into effect.
- Seller paid closing cost maximum is reduced from 6% of the sale price to 3% of the sale price
- Upfront Mortgage Insurance Premiums (MIP) on loans with less than 20% down payments will increase from 1.75% of the sale price to 2.25% of the sale price
- Minimum down payment for buyers with lower credit scores will increase
In order to take advantage of the old rules, FHA loan case numbers need to be assigned to a transaction by April 5, 2010.
Since April 5 is a Monday, and it can take 1 business day to get a case number assigned, buyers should have an accepted contract submitted to their lender by Friday April 2 if they are using an FHA loan and want to avoid the new policy changes.