Real Estate Market at a Glance

FHA REQUIREMENTS FOR LOANS ARE BEING INCREASED

As the housing market struggles nationally to gain ground and post postive growth, challenges and changes continue to create obstacles to achieving that growth. Once such challenge has recently been implemented with one of the bright lights in the home buyer process.

FHA insured loans have steadily grown as owner occupants have found the low down payment of 3.5% very attractive vs other types of loans.

However, the requirements for Borrowers to qualify for FHA insured loans are being changed.

Due to the increase of FHA insured loans increasing from 3% of all mortgages issued to nearly 25% today and the default rate increasing from 5.4% to 8%, the FHA is running out of money. The recent shortfall of FHA funds to below the 2% threshold required by Congress requires implementing changes in their lending guidelines that will effect the ability of Borrower's to qualify for loans.

For Borrowers, the following changes are anticipated:

Appraisal policies will be based on the Fannie Mae and Freddie Mac
requirements. This has made the 30 day close for a purchase requiring financing virtually obsolete.

Income documentation will be required for all types of loans eliminating the streamlined reduced documentation previously available for refinances

Higher mimimum credit scores will be required which will reduce the pool of qualified Borrowers

A proposed increase in the minimum down payment on purchase transactions could also affect the pool of qualified Borrowers.*

Also, the list of FHA approved condos will be modified to delete those condos approved BEFORE 10/1/08. This will be effective 11/2/09. These unapproved condos will need to be resubmitted for FHA approval. The procedures for this process are still to be determined.
This could have an affect on the number of buildings available for FHA loans and options for Buyers. **

Thus, the housing market recovery period will likely face further delay caused by these additional government regulations.

If you're a prospective Buyer and want to take advantage of the $8000 Tax Credit for First Time Buyers , you should be sure to discuss your financing needs with a Knowledgable lender who is familiar with these changes and how they can affect you.

If you'd like a REFERRAL to a lender with this knowledge and expertise, contact Dwight Ellis at 808 351-1507.

* Info from Alan Zukerkorn, President of Hawaii Mortgage Co, Inc

** Info from Darren Wong, Loan Officer, Pacific Access Mortgage.
Dwight M EllisRealtor Associate
“Your Hawaiian Real Estate Connection! “Designations:
Graduate Realtor Institute (GRI)
Certified Home Marketing Specialist (CHMS)
Certified Mobility Relocation Specialist (CMRS)
Certified Affinity Relocation Specialist (CMAS)
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DwightE@CBPacific.com
Website www.CBPacific.com/DwightECOLDWELL BANKERPACIFIC PROPERTIES1909 Ala Wai Blvd, Ste C-2
Honolulu, HI 96815