If you were around twenty years ago you will notice that we are simply going back to a time when you had to have good credit, money to put down on a house and a good solid job in order to purchase a home. In other words, you will have to have your finances in order to own a home in the future. Though we don’t know all the specifics, we do know things continue to change. Stay tuned and I will keep you updated as they come in. In the mean time, if you are ready to buy, it is definitely a good time to do it with rates low and inventory high.

When mortgages imploded and people could not pay their note, it is the mortgage insurers that got caught; big time. This is why it is now so difficult to get a second mortgage and why mortgage insurance has gotten so high. The bottom line is the FHA loans have put people in homes for the first time, have saved people from loosing their homes and have secured the housing market so it can slowly recover. FHA has its place and it’s a good place for the American people.

This past week has been a rough one for some of the people I have talked to, all of who have multiple houses and are paying their bills and mortgages on time.  The issues have to do with being self employed and not showing enough income on taxes and wanting to refinance a second home for cash out.

Since every loan is basically a full documented loan these days it means that you have to prove your income.  There is no more stating an income or doing a no-doc loan.  These loans, at least for now, are a thing of the past and no one expects them to come back any time soon, if ever again.  Lenders want to see income and it needs to be income that has come in over the last 2 years, or capital gains income that has been consistent for 3 years.

The other restrictions have to do with cash out refinances.  There are no cash out refinances for second homes, period.  The only loans that you can get above 85% cash out are through FHA and they are still at 95% though we have heard that they are lowering it to 85% as well.  We just don’t know when.  So if you think you are going to take advantage of this low interest rate, you may want to think again if you can’t prove your income, meet the debt to income ratio or try to get cash out with little or no equity in your home.  It can be a tough row to hoe and the only way to see if you can qualify is contact your lender and go through the motions.

Not long ago, loan officers were laughed at if they recommended their clients go with a FHA loan.  Most Realtors and customers alike were under the impression that a FHA loan was harder to close and harder to get an appraisal approved.  Though that was true at one time, over the last three to five years FHA has been slowly changing into a very viable and competitive loan for first time homeowners as well as those looking to refinance at the lower interest rates.

Here are just a few things about FHA to consider when looking into loans.

• Interest Rates are competitive
• Mortgage Insurance factor is lower
• Currently has a higher cash out ratio
• Currently has less restrictions and cost associated with credit scores
• Appraisals are equivalent to conventional appraisals
• Required to put less money down

Any of these can change tomorrow so you will need to stay in touch with your loan officer and make sure these guidelines are still in effect.

The government continues to make changes to the FHA program and the people I have talked to don’t think the changes are over with as of yet.  Though these changes are supposed to help people continue to get into homes and to protect them, I’m not sure there are any changes that can protect you more than good basic knowledge of how to purchase a house.

I met a young lady today that has a good deal of knowledge because she took the time to attend a first time home buyer’s class.  Though it was on a day that she had many other things that she would have rather done, she took the class.  I asked her if there was anyone in the class that she felt didn’t need the class and after pausing and thinking about her fellow students told me every one of the people needed the class.

Please, whether you are a first time home buyer or not, if you have never set in on one of these classes and are looking to purchase a home over the next year or so, find a class and attend.  You may know some of it and get a little bored but overall, you will not regret it.  Untimely, it is up to you to protect yourself from the unscrupulous that still exist in the real estate business.

One of the best places for anyone to go for the real answers is the official FHA (Federal Housing Administration) website; HUD.com. The only challenge is to figure out which section proteins to your question or concern.  It is easier if you look to the left hand side of the page and choose the topic closest to yours.

There are sections to buy a home, sell a home, owning a home and renting a home.  There are also sections on specialized FHA programs for section 8 and homeless as well as renovation loans and how to avoid foreclosures.   This resource gives you a lot of information on what is available from the government to current home owners and potential home buyers as well as how to protect yourself if you are selling your home.

You are ultimately responsible to know what is out here and available to you and the HUD website is a great way to start educating yourself.  Nothing will take the place of having this knowledge and you will know what to look for and what to avoid when dealing with the purchase and sale of your next home.