Knoxville Home Buyers Now Is The Time To “Go FHA”
Knoxville Home Buyers are you confused by the Mortgage Process?
Shopping for the lowest rate mortgage is often a game of luck.
Some days, mortgage rates are favorable. Other days, they’re not. And while you can sometimes make an educated guess about where rates might be headed, you’re not always going to guess right.
Even the Knoxville Mortgage experts get it wrong more often than they’d like.
But some parts of the rate shopping process can be predicted and one of them is the future of mortgage guidelines.
In general, the more often homeowners default on their respective mortgages, the harder it is for future mortgage applicants to be approved.
This is why “now” may be the best time to apply for a FHA mortgage. Defaults are climbing, suggesting that FHA underwriting guidelines are about to tighten.
Indeed, the FHA has implemented two major changes since last summer:
- The downpayment required was raised by a half-percent to 3.500 percent at minimum.
- Cash out refinances are now limited to 85 percent, down from 95 percent.
These changes create barriers to entry for potential FHA borrowers, improving the overall quality of the FHA loan pool.
For a taxpayer-funded agency like FHA, loan performance is an important goal. Therefore, as the number of defaults grows, expect FHA guideline to get tighter.
The problem is, though, we can’t predict just where the FHA will tighten. Maybe the FHA raises its minimum FICO score requirement, or maybe it gets tough on seller-paid closing costs. A hike in loan fees isn’t out of the question, either — that’s the path Fannie Mae took, after all.
Whatever the FHA does, fewer people will qualify for FHA mortgages once it’s done. So, if you’re planning to buy a home and your downpayment is limited, or your credit scores are suspect, or there’s some other “red flag” in your profile, consider moving up your timeframe to act.
Mortgage rates may rise or mortgage rates may fall, but neither is going to matter if you can’t get qualified for a home loan. And, for FHA mortgage applicants, tougher mortgage guidelines are only a matter of time.
I can make your home search easy and very enjoyable. Start searching for a home on TheBigOrangePress.com. If you need a Mortgage Professinal feel free to contact Patty Francisco you can call her at 865-392-5803 or email
Please contact me for any of your real estate needs at 865-696-9002 or Rick@TheBigOrangePress.com
(Image courtesy: The Wall Street Journal Online)