Have you heard about FHA financing Reform?
FHA Financing Reform
Due to recently passed legislation, it will soon be easier to obtain FHA financing. The US Senate passed H.R.3700 last week. This is the “Housing Opportunity Through Modernization Act. In fact, the National Association of Realtors has supported this bill.
What’s the purpose?
The purpose of FHA financing is to make it easier for people to obtain financing to purchase homes in condominium communities. The primary reason for FHA Financing is that it requires a smaller cash down payment. Additionally, a lower credit score is permissible than with many conventional financing programs.
There has been a long standing issue with FHA financing. To obtain FHA financing, a condo association needs to be an FHA Approved project. Over the years, many of the previously approved projects have had their approvals expire. The process to renew with the FHA is time consuming and costly. Consequently, many condominium associations have not gone through the process to renew.
A condominium must be approved for FHA Financing. If it isn’t, this means buyers cannot make use of FHA financing to purchase. And quite often, this is their first home.
With FHA financing, buyers can purchase with only 3.5% of the purchase price in cash. In conventional financing, a 20% cash down payment is typical. Many first time buyers have to struggle to save the necessary 20% down. Additionally, VA Financing usually follows the FHA guidelines.
What about single family homes?
Single family detached homes are not affected by the FHA approval process.
H.R.3700 makes changes to the recertification less of a burden to the condo associations. The current policy of 50% of an association’s owner-occupant has been modified to 35%. Less restrictive policies on transfer fees are also enacted.
Many active adult communities are also condo ownership. As a result, these changes will also affect senior citizens.
If you have questions, please call me – Art Reiman at 732-598-7700