What The New FHA Guidelines Mean For Buyers

These two stories:

FHA plans to require borrowers to produce more cash for down payments
The Federal Housing Administration plans to increase the amount of up-front cash paid by all new borrowers and to require higher down payments from those with the poorest credit, according to agency officials

and

FHA Increases Upfront MIP Fee; Raises Credit Score Requirement; Reduces Seller Concessions
As promised in December, the Federal Housing Administration has announced the details of changes intended to strengthen its capital reserves which were reported to be headed into dangerously low territory late last year

may be causing buyers some consternation.

Buyers with poor credit will be the most impacted in the short term, but in the long term, buyers will be helped if FHA’s tactic works. Why is this? It is because the market will tighten up again, the dollar will strengthen and home prices will stabilize. This will make it possible for buyers with poor credit to establish good credit and will also give them time to save money for the down payment.

We must not think that the Aermican dream of homeownership is dead. In the early days of America, buyers bought homes with cash. There were far less mortgages in those days. And we may be headed there again.

It wasn’t until after WWII that the mortgage expanded to what we see today. So in the long run, buyers will find themselves in a better position than their parents in that the current economy will have forced them into frugality and saving, habits that will allow them to pay cash for homes or pay larger down payments  and have less mortgage to pay off.

Every downturn has a benefit and I believe this future benefit to buyers will be significant.

This entry was posted on 01/21/2010 at 13:22 and is filed under Branson/Tri-Lakes Market, Advice For Buyers, News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.