Patricia Paul Properties

Patricia Paul Properties

Commentary on Tucson Area Real Estate, Home Ownership, Rental Homes, and Life around the Tucson Community

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The very popular FHA insured home loans will be increasing some of their costs.  The first change will entail an increase to the up-front mortgage insurance premium paid at closing.  It is scheduled to increase to 2.25% of the loan amount in the spring. (It is currently at 1.75%).  So on a home loan of $100,000, the up-front fee would go from $1,750 to $2,250, or a $500 increase.  The FHA also intends to ask Congress to allow an increase in the annual premium (think higher monthly payments). 

The Agency will also be limiting the amount of sellers concessions allowed to apply to buyers closing costs.  Currently it can be up to 6% of the purchase price, but will be decreasing to a maximum of 3%.

Also, buyers with lower FICO credit scores may have to come up with larger down payments.  

These changes are being implemented to try to offset some of the losses the FHA has recently sustained.   The FHA (Federal Housing Authority) does not make the loans, they only insure them.  Currently more than 30% of home loans are FHA backed.  They are especially popular because they require far less down payment than conventional mortgages do.

What does this all mean?   If you are thinking about purchasing a home, the time to do it is now, before the changes.  And if you are thinking of selling a home, you might want to do that before costs increase for the buyers.  Their increased costs mean that much less is available to them for their purchase.

Please contact me if I can clarify any of this for you, or if you would like me to put you in touch with quality lenders.

Patricia Paul, GRI *** *** (520) 548-2078 







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