We constantly find that there is a great deal of misunderstanding related to the idea that every lender has a set of guidelines which have basically been cast in stone.  An example of this is “...They say you can't get a mortgage if you don’t have a credit score.”

There are many different types of generic guidelines which form the basis for mortgage approvals.  In effect, these are “rules” which lenders use as their baseline for evaluating loans.  The most popularly known guidelines are - FHA, VA, FNMA (commonly referred to as "Fannie Mae"), and FHLMC (commonly referred to as Freddie Mac").  These guidelines and procedures change frequently and many lenders will deviate from these guidelines in order to obtain a special competitive advantage.  As a consumer, it is critical that you choose a lender who has a good understanding of the basic guidelines.  In addition, you should seek a company with access to multiple lenders who have the ability to deviate from standard financing guidelines.  You can make a big mistake by going to a lender who only offers one method of financing your home, such as a local bank with only one set of guidelines.

At Churchill Mortgage, we assess hundreds of loan programs from the top banks and mortgage servicers from across the country.  This allows us to evaluate multiple lending sources to find the loan that best fits your needs.  Contact one of our Home Loan Specialist at 1-888-562-6200 if you are interested in purchasing or refinancing your mortgage.  You can also visit our website www.churchillmortgage.com to Request A Call Back and we will contact you at a time that is convenient for you.

FHA has announced some major changes to their lending guidelines that will have quite an impact on lenders and borrowers alike. 

Upfront Mortgage Insurance 
The Upfront Mortgage Insurance that FHA requires on most of their loans will be increased from 1.75% to 2.25%.  This amount is added to the final loan amount, so there will not be additional funds needed at closing from the borrower.  This change will go into effect in the spring of 2010.

For example, a borrower with a loan amount of $200,000 would normally have $3,500 added to their loan balance due to the M.I.P.  Now that the M.I.P. has been raised to 2.25%, that amount will go to $4,500. 

Monthly Mortgage Insurance
They are also requesting legislative authority to raise the annual M.I.P. as well, which will raise each borrower’s monthly payment.  This could be very detrimental to borrowers who just meet the income cutoff guidelines now because an increase in the monthly M.I.P. could keep them from qualifying.  The amount they are requesting has not been increased as of yet, and there is no expected date for this change to go into effect because they must get approval first.  But it is expected they will get the approval quickly and implement sometime before the summer is over.

Maximum Seller Contributions
Seller contributions to pay borrower closing costs is currently 6%, but will drop to 3%. 
Using a $200,000 purchase price, that is $6,000 less the seller could contribute on a purchase transaction to help the borrower.  This change is expected to go into effect in the early summer of 2010.

Low Credit Scores
Borrowers with credit scores below 580 will be required to put at least 10% down.  (This is somewhat of a non-issue because few lenders that offer FHA loans will accept credit scores below 620 in today's market.)  This change is expected to go into effect in the early summer of 2010.  

More Liability For Lenders
HUD is also proposing several changes that will affect FHA lenders.  One that has the potential to have a negative impact on borrowers is HUD’s proposal to put more liability on the lenders to “assume liability for all the loans they originate and underwrite.” 

Why is this a potential negative for borrowers?  Two important reasons. 

 -  If lenders are required to assume more liability, that will equal cost.  And cost always gets passed on to borrowers in the form of higher interest rates. 

 -  Higher liability will equal stricter quality control processes.  In an already restrictive underwriting environment, this can cause more turn downs and longer times to underwrite and close loans.  All the more reason for homebuyers to get into the market now, get a contract on a home before April 30^th if you qualify for the tax credit, and avoid the new FHA costs. 

Find out more about the Pros and Cons of the different lending programs at our website: http://www.churchillmortgage.com/Info/fha-va.aspx

Read the official FHA press release here:  http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016