Week 3, January 2010
More tightening of FHA guidelines on the way. That’s the message that came out this week with an implementation-time predicted somewhat nebulously as “this summer.” I have to say I find it interestingly ridiculous how we get fed this line from politicians about how we “need to free up credit and get banks lending again” and yet month after month on the front lines of lending we are seeing guidelines tightening. But frankly, for once, I think these restrictions are pretty reasonable. So now, with FHA’s new rules the two changes that will affect most borrowers are that the Up Front Mortgage Insurance premium will rise from 1.75% to 2.25% and that the current 6% max “Seller Credit” will now be capped at a max of 3%. In real dollars, the change in the up front premium makes a difference of only about $11 a month on a $400,000 loan at 5.5%. And the seller credit restriction? Well, that one will be a tough one for some situations. But generally, in the bay area, a 3% credit enables a pretty substantial sum and only rarely have I even seen a larger credit than 3%. And lastly, the change that maybe will grab some unusual attention is that for borrowers with credit scores below 580 the minimum downpayment will now be 10% instead of 3.5%. Well, in reaction to that I have to say I haven’t seen an FHA lender in California funding loans for borrowers with credit scores lower than 620 anyway. So, we’ll see if there is much effect at all from that change for our area. So, in general, the toughest change in my opinion is the reduced seller credit for some situations. The .5% increase in the up front premium sounds bad, but I think it will be hardly noticeable in real dollars. And the lower credit score requirement is basically off the table in our area right now already. Conclusion: be glad for the FHA program. It’s going to continue to be a great opportunity.
See here for more on the coming updates to the FHA program.
To contact me about financing your dream-home click here.
Weekend Wanderer’s Events
…finding the treasures in your town and beyond.
Two for This Weekend:
Harry Denton’s Starlight Room in San Francisco: This is just one that I haven’t mentioned in a long time and after being reminded of it today I felt there was no question I would recommend it today. Overlooking the center of Union Square at the top of the Sir Francis Drake Hotel, Harry Denton’s is both welcoming and glamorous. The seven-piece Starlight Orchestra pumps out the beats on the weekends and the vibe is unmistakably San Francisco. You’ll see for yourself when you get there. Cheers!
San Francisco Segway Tours: These days, the tours are running in both daytime and nighttime. Once again, I know I am a sucker for touristy things. (Maybe I’m just a life-tourist.) And this funky little tour option enables you to ride on these awesome single-person transports (like you’re in some science fiction movie or somethin’) and up and down the hills around the waterfront near Fisherman’s Wharf. An alternative route takes you through the Marina District and directs you to the beautiful Palace of Fine Arts. Day or night, check it out!
Help Your Fellow Living Beings:
Charity Navigator: From their website: Charity Navigator, America’s premier independent charity evaluator, works to advance a more efficient and responsive philanthropic marketplace by evaluating the financial health of over 5,400 of America’s largest charities. The disaster in Haiti is a poignant reminder of how important it is to take up these causes. Hope this resource helps those of you who choose to give to various charities.
Two Weekends from Now:
San Francisco Hearts Haiti: It’s actually next Wednesday, not on the weekend, but it’s a fantastic benefit show being put on at The Independent in San Francisco. Here’s the lineup: SILA, Kalbass Kreyol (from Haiti), Bayonics, Native Elements, Joe Bagala, Meklit Hadero, Thank You Julius, and DJ sets by Jeremiah (with Afrobeat Nation), Non-Stop Bhangra Djs, Felina, DJ Amar & Electric Vardo Live and J-Boogie. You can join in, have a fun Wednesday night, and contribute to this great cause.
Pic of the Week… from my phone camera:
Stinson Beach After a Rainstorm