Federal Housing Administration has announced some possible changes for 2008. A few of these should have significant impact on the local housing market if they do happen.
The biggest one is that they will be raising their loan limits to $417,000. It is currently $280,250 for the Kern County area. This means a borrower could potentially get 100% financing on a home up to $417,000 and have their closing costs paid! This could really help speed up the sales of homes in a little higher price range, by offering a 100% finance option without the PMI or 80/20 programs with the high interest rates that are available now. The trickle effect of that could be that once the sellers of these homes around $400,000 are able to sell, they will in turn go out and buy homes in the $500,000 range and so forth.
Another new loan type they will be considering is a 40 year option instead of just the traditional 30 year.
The last major change could be offering loans to people with credit scores as low as 500. Typically you have to have at-least a 580 to have a shot at an FHA loan.
None of these changes are in stone yet, but even if 1 or 2 of them go through it could be the much needed bailout the housing market has been waiting for. We'll keep you up to date as more information comes out, but please do not hesitate to contact us with any questions in the meantime.
Have a great week!
Jared