FHA Gains Increased Stability

The National Association of REALTORS® recently issued this press release concerning FHA, and I thought it was a compelling article to include in my blogspot:

Washington, November 16, 2010

The latest independent audit of the Federal Housing Administration shows the agency’s financial condition has improved from last year, when it announced its capital reserve fund had fallen below the 2 percent level mandated by Congress. The annual audit shows that the capital ratio for the single-family portfolio rose from 0.42 percent to 0.79 percent over the past year.



FHA Makes changes to become more stable.

 The audit, which calculates the financial condition of the agency’s insurance fund, also showed the mortgage insurance fund grew more than $1 billion in 2010 and reserves are expected to remain above $9.9 billion even if home prices were to fall further. The audit indicates that FHA will most likely not require a bailout now or in the future.

“As the leading advocate for home ownership, the National Association of Realtors® strongly supports FHA’s mortgage insurance programs,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “FHA announced major changes earlier this year and took critical steps to strengthen and ensure its long-term financial soundness, and those efforts have paid off.”



FHA Total reserves have grown to $33 Billion.

 FHA’s audit reflected a change in home values and was not tied to excessive increases in defaults or unsound underwriting practices. In fact, the credit quality of FHA borrowers has increased significantly in the last several years; the average credit score for FHA customers has grown to 693, and less than 8 percent of the agency’s purchase borrowers this year had FICO scores below 620. The capital reserves are not FHA’s only reserve fund; FHA also has a cash reserve account separate from the capital reserve – and actual total reserves have grown to $33 billion.

“The future health of FHA’s reserve funds depends heavily on the direction of home values in the coming years. Home values have shown patterns of stabilization over the past 18 months, and in a recent independent survey, most economists expect modest home price gains over the next 3 years, so FHA’s reserves should steadily improve,” said Phipps.

FHA has played a key role in providing mortgage liquidity to qualified home buyers in recent years and has greatly increased its market share; according to the agency, FHA guaranteed nearly 40 percent of home purchases in the past year.

NAR is working closely with FHA to reassess and amend their lending policies so even more qualified home buyers can become home owners.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

For information on Real Estate in Battle Creek or Calhoun County, Michigan, give me a call at: 269-441-8182 or contact me through my website at: http://www.michaeldelaware.com/.

The Basics of Buying a Home in Battle Creek, Michigan

The basics of buying a home in Battle Creek, Michigan are consistent with most any area of the country.  The first thing that a buyer should do above any other step is to contact an experienced and knowledgeable local Realtor. 

Using a local Realtor is your first most important step.

A Realtor is a valuable asset to helping you through the step of the process of buying a home, and can also help you find local lenders that specialize in loan programs that would best suite your needs. 

The basics of buying a home in Battle Creek, Michigan or anywhere in the financing part require a credit score currently above 620 for most programs, verifiable income, meeting the income requirement guidelines for the given program, and other details such as job tenure.  Sometimes a buyer will have a 620 credit score, but will have overcome a challenging period on their credit history such as bankruptcy or foreclosure in the last few years. 

Some loan programs will not approve a loan if the bankruptcy has been discharged less than 3 years, or the foreclosure less than 2 years.  Other things on the credit report can require explanations, or settlement such as judgments or recent non-medical collections.

 



Proof of funds or 'Proof Financing' are requirements to
submit with any offer along with a copy of the earnest deposit.



Once you have overcome what is needed to gain an approval letter from a lender, you then can begin looking at houses with your Realtor.  After you have selected the home you want to make an offer on, note that not only a copy of the pre-approval letter is required to submit with an offer, but also an earnest deposit along with the signed contract and other documents related to the house prepared by your Realtor. 

Many first time home buyers do not realize they will need to provide an earnest deposit, which is a sum of money down (usually $500 on most houses under $75000, but can be anywhere from $1000 to $2500).  The earnest deposit is held by your Realtor, and deposited into an escrow account once an offer is accepted and it is held until closing, where you are credited for it on the final sale of the home.  This money down makes it a legally binding contract in Michigan.

 

To learn more about the basics of buying a home in Battle Creek, Michigan, give me a call at: 269-441-8182 or visit my website at: www.michaeldelaware.com and fill out a contact form there in the left column that best describes your situation.  I look forward to working with you.



Contact Michael Delaware, Realtor for more on the basics of buying
a home in Battle Creek, Michigan at 269-441-8182 or his email.