NEW FHA GUIDELINES - MAY LEAVE BUYERS OUT

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Beginning November 1, 2009 FHA will be implementing a new rule that is disallow a commonly used proceed for underwriting called “Spot Approvals”. What spot approvals are is when the lender will approve a single unit in an association or condo complex instead of the whole building for FHA financing.

Typically, if an association has a heavy default rate or low reserves the complex /association will not qualify for any property to be purchased via FHA financing. Spot approval gave qualified buyer the opportunity to purchase these homes regardless of the previously mentioned conditions if the single unit can pass FHA inspections and appraisals.

The advantage of FHA financing reaches every buyer who is qualified enough, hasn’t purchased a home in over 3 years or is purchasing their first home ever. FHA financing allowed for lowered interest rates and sometimes credit from the government for purchase.

Now that the FHA “spot approval” is being taken away this will cause a serious ripple effect for our real estate market not to mention taking many potential buyers out of the running’s to purchase these homes.

Buyers will now have two popular options in front of them. Either pay cash, or come up with a large down payment to qualify for conventional financing options. Both options being harder to obtain than what FHA guidelines require for purchasing a home, traditionally only a 3.5% down payment.

With less homeowners being able to qualify for FHA financing more homes will go unsold, depleting home values across the city and county.

Additionally, the more values drop and condo assessments drop the collective tax base will decline therefore leaving other homeowners, specifically single family home owners to pick up the slack and pay the extra amount through increase property tax and millage rates.

Before you purchase a condo it is best that you visit the www.fha.gov website and see if a particular condo association is FHA approved.

For more news and information on (REO’S) visit our website atwww.gsigllc.com