Ann Arbor and all of Washtenaw County residents, FHA has made changes to their lending criteria.
- Sellers will now only be allowed to ask for 3% in seller concessions. This is important as many home buyers need 6% on their homes. In Michigan where many times the sellers have moved the home as gone back to non-homestead taxes, so this could potentially slow down the amount of buyers entering the market. HUD (Housing and Urban Development)has not determined when this will go into effect.
- Condo’s will no longer be allowed to be spot checked. This means the entire project must be approved to get a loan there. This will greatly affect us in Ann Arbor as we have many condo communities so the buyers will need to get a conventional loan. In order to get a spot check you must be under contract on or before February 1st. With a case number. Ask your lender to assign a case number to your file RIGHT AWAY.
- Many of our subdivisions in Washtenaw County are called Site Condo’s. They will now be treated the same as residential homes, which they were, but FHA required proof. This will no longer be necessary.
- Private Mortgage Insurance (PMI) is required on all FHA loans when you put down the current 3.5% as a down-payment or less than 20%. It is currently at a rate of 1.75% increasing to 2.25% on all loans assigned after April 5th, 2010. If you are moving to Ann Arbor Area, get under contract before April 5th with an assigned case number to save on your mortgage insurance.
- Credit scores will be raised from the 580 credit score to 620 to 640 if you put down under 10% of the purchase price. This date has been established either. I don’t see this as being a huge deal as many lenders are already requiring it.
If you are a Resident relocating to University of Michigan for medical school, be mindful of these dates if you intend to finance your condo with FHA.