With many aspects of the industry changing constantly, there are some facts that the public must be aware of in order to avoid losses in real estate transactions. For example, as of April 5th, FHA will be increasing their upfront mortgage insurance premium by a half of percent from 1.75% to 2.25%. This is to help cushion their risks which they have taken in a down market. Also, FHA has many other changes in the works that will change the market. First, they will be increasing the minimum required down payment for individuals with a credit score of less than 580, to 10% from 3.5%. Next, they will be reducing the maximum amount of seller's concessions that can be received by a buyer from 6% to 3%.These changes will strongly hinder home sales in the area. The changes will decrease the amount of buyers that are able to buy because of their seller's concessions being slashed. Seller's concessions help 1-st time and other buyers to pay for mortgage origination fees, title insurance fees, etc. This reduction will possibly force these buyers to seek assistance before being capable to buy.
Lastly, the foreclosures will be out to get us again! If you are looking to sell any property in the near future, NOW IS THE TIME! With more than 4.5 million mortgages in foreclosure or close to, the values of all homes in the area are still going to see a large hit after these properties have been placed on the market. Keep in mind, the banks have been trying to liquidate their inventory faster rather than for higher values. This means that the sellers will have a rough time maintaining their value when neighboring values are plummeting.
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