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Rob Saxe's Blog

By Rob Saxe | Agent in Rocklin, CA

New FHA Guidelines Make It Harder To Qualify

Changes Could Affect Values

fha-tax-credit-sacramento-real-estateThe new FHA guidelines, along with the expiration of the first time home buyer tax credit, could adversely effect home values in the Sacramento real estate market.

And let’s not forget the regions 15% unemployment.  This is not a good combination for our region.

Just when we thought it was safe to go back into escrow.

With guidelines changing and loans for first time home buyers, or anyone for that matter, getting tougher to qualify for, a sales decline and resulting inventory increase could depress home values in the region again.

The word on the street is that more homes will be coming on the market soon.  A quick inventory check doesn’t show that there have been any significant increases yet.

Is that hissing sound the air being let out of the nice little recovery we had going?  Or just the ringing in my ears that’s been there since 2007?

Changes In FHA Policy

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By Jennifer Beeston,  Sat Jan 30 2010, 09:39
Loved your blog. Hopefully, it will not knock 20% out of the market. I do not think the credit score (fico) issue is very big because realistically most lenders have not been able to do FHA loans for anyone with a FICO lower than 620 for over a year. There are a few brokers who can but the big banks have been staying away from lower fico's for awhile. Also if your fico is under 620 there are generally some serious reasons why.

In order to keep buyers and not lose them due to the guidelines
1) If a borrower needs a 6% contribution from the seller get them qualified for Homepath. Homepath has a 3% down program and will allow up to 6% seller contribution . In Sacramento you have a bunch of Homepath listings. We do Homepath every day and it is a really cool loan.
2) If they do not qualify for Homepath and they need 6% get them in a purchase by April (when the new guidelines become effective) and tell them to start saving now just in case.
By James,  Sat Jan 30 2010, 17:11
Good points Rob.

Also add in the coming Cal Budget crisis (With cutbacks, furloughs and/or tax hikes) causing more inventory (foreclosure and people/jobs leaving the state) as well as coming higher interest rates. That hissing your hearing is not from 2007.

Sure if you give people thousands of dollars to buy houses and cars and drop the interest rate to levels never before seen, people will buy. Heck if I could find the right home I'd buy right now. But when you stop giving the money people tend to stop buying as will I. Worse still the government handouts and lower interest rates will need to be paid by us and our children in the future.

By Rob Saxe,  Sat Jan 30 2010, 18:31
Thanks for the comments you guys! Very helpful information for consumers out there..if only, on my part, opinion anyway..
I think we could see up to 15% of the buyers knocked out of the market with these changes but largely the changes were needed to shore up the FHA requirements and come into line with the rest of the lending industry.
Thanks again for the participation!
By Kmachado,  Sun Mar 13 2011, 17:12
What's your opinion on homes prices and interest rates in two years? My fico is 615 trying hard to get in above 620 only bad mark is a car dealership whom ripped me off I have two more years before it drops off. All my other credit is current and good.

someone mention a government loan with 1/2% down with fico 530 is this true or to good to be true?

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