Mortgage Standards Tighten Up in 2013

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Mortgage Standards Tighten Up in 2013

The Federal Housing Administration (FHA) announced it will publish new mortgage standards for certain home owners and replace the reverse-mortgage program effective January 31, 2013. Changes to the popular program include suspending the option that once gave those 62 years and older the ability to take out cash on their homes in a lump sum, upfront payment.

Realtor Magazine indicates it will be replaced with the Home Equity Conversion Mortgage saver, which offers lower cash payments in installments. Many can expect to see increased insurance premiums, stricter standards to underwriting for borrowers with credit scores between 580 to 620, and limits to the debt-to-income ratio.

The tightening of standards is a direct result of the continued pattern of risky lending in recent years according to a recent New York Times article. For more information on the FHA’s programs and up to date changes visit www.fha.govPhoto Credit: National Building Museum/AP

 

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