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| Housing Permits Spike For The Second Straight Month Posted: 22 Jan 2010 06:45 AM PST
In December 2009, starts fell by nearly 7 percent. The news is mildly disappointing but not too bad. The likely cause for the Housing Starts drop is December's rough weather conditions. It's tough to break ground when Mother Nature won't coordinate and last month was especially hazardous in a lot of parts of the country. More cheery, however, is that for the second straight month, Housing Permits exploded. A housing permit is an certification from local government that authorizes construction. After posting a 7 percent gain in November, permits rose by another 8 percent in December. It's a signal that housing is, indeed, in recovery -- despite the falling number of actual starts. More permits mean that builders plan to bring more homes on the market for what's expected to be a very busy spring home-shopping season. According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Therefore, Housing Starts should start rising soon anyway. For home buyers, the news couldn't be better. With more homes coming online, competition among home sellers should increase, and that will suppress the rise in home prices nationwide. It's basic economics. When home supplies grow faster than home demand, prices fall.  |
| Spring 2010 FHA Guidelines Make Borrowing Tougher And More Expensive Posted: 21 Jan 2010 08:45 AM PST
In a statement issued Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group's portfolio risk while strengthening its overall financials. For consumers, the changes mean higher costs. As listed in the official announcement, there are 3 major guideline updates for the FHA:
Furthermore, the FHA has appealed to Congress to raise an FHA borrowers' monthly mortgage insurance premiums. To read the FHA's statement, it's clear what the group is trying to balance. On one side, the FHA wants to provide affordable financing to families that need it. That's its mission statement. On the other side, though, the FHA must manage the risk that comes with insuring lesser-quality loans. To that end, the FHA is stepping up its enforcement of "bad lenders" in hopes of stopping problems where they start. Also in its new policies, the FHA is introducing a "termination clause". If banks or loan officers that produce more than their fair share of bad loans, they lose their right to originate FHA mortgages. As a result, homebuyers should expect tougher FHA underwriting in 2010. Not because the FHA says so, necessarily, but because banks don't want to do "bad loans". Lenders are incented to turn down at-risk applicants and, already, we're seeing examples of this. Despite FHA allowing 580 FICOs and lower, many banks have made 620 their minimum. Some have other guideline overlays, too. The FHA's new guidelines don't go into effect until spring. So, between now and then, the old guidelines will apply. Therefore, if you know you're going to need an FHA home loan in the next few months, consider moving up your time-frame. If nothing else, you'll save some money at closing.  |
A "Housing Start" is a privately-owned home on which construction has started. It's an important gauge of housing health because it tracks new housing stock nationwide.
Securing an FHA mortgage is about to get more expensive.| You are subscribed to email updates from Atlanta Real Estate -- Peter Bright, Mortgage Blogger To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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