Interested in buying a home? Here are some important dates you need to know about before your home buying venture.
1. June 15, 1976 – Manufactured Homes
If you are in the market for a manufactured home, you’ll want to pay special attention to this date.
If the manufactured home you are considering was built before June 15, 1976, you may not be able to secure financing.
The U.S. Department of Housing and Urban Development (HUD) created standards to which all manufactured home builders must adhere to. But these standards were not implemented until June 15, 1976. So, any manufactured home built before this date is not eligible for FHA or conventional financing.
If you find a manufactured home built prior to this date, you may want to pass on it and find something newer.
2. January 1, 1978 – Lead-based Paint
On this date, lead-based paint was outlawed in the U.S. The reasons for the ban are obvious: lead is poisonous.
Chipping paint on a home built prior to 1978 could indicate a health hazard. For this reason, an appraiser will call for damaged paint to be treated. The lender will not fully approve the loan until the chipping paint is remedied to the appraiser’s and lender’s satisfaction.
Homes of this age often have chipping paint somewhere on the exterior. If you are looking at homes built before 1978, be prepared for paint issues, and work with your real estate agent to have the seller fix the problems promptly.
Usually treatment is as simple as scraping and wire brushing the chipping paint, then covering it with new paint. But, sometimes more work is involved, so make sure the seller is willing to complete the repairs. Check with your lender for additional requirements it may have regarding lead-based paint.
3. October 1, 2013 – USDA Loan Boundaries
U.S. Department of Agriculture (USDA) Rural Development loans are only for homes located in areas deemed “rural” by USDA. These areas were determined by the 2000 census.
Now that the 2010 census is completed and analyzed, new boundaries for USDA loans will go into effect on October 1, 2013.
Up to 9.1 million people live in areas that will no longer be eligible for USDA financing. This is a big deal, since USDA is one of the only zero down loan types available in today’s market.
To see if your area is eligible after October 1, 2013, see USDA’s future eligibility map.
4. June 3, 2013 – FHA Mortgage Insurance
On this date, FHA implemented a new rule stating anyone putting less than 10% down on an FHA loan must pay monthly mortgage insurance for the life of the loan.
So basically it affected just about all FHA home buyers, the vast majority of which put the minimum down payment of 3.5% on the home.
The lifetime mortgage insurance is a big cost increase over FHA’s previous policy, which stated that mortgage insurance must be paid a minimum of 5 years or when the loan amount reached 78% of the original purchase price.
Home buyers will now pay mortgage insurance for 20 to 25 more years which could add up to tens of thousands of dollars.
If you are in the market for an FHA loan, it may be worth checking out a conventional mortgage with private mortgage insurance (PMI), which is not a lifetime payment. You can cancel PMI when your loan reaches 80% of your home’s value at the time of purchase.
5. December 31, 2012 – Housing Affordability
According to the National Association of Realtors, this date closed the period in which homes were more affordable than ever before.
The NAR 2012 Housing Affordability Index reached an all-time high of 193.5, where 100 represents when the average household can afford the average home.
The high rating indicates that home prices and interest rates are low and household income is comparatively strong.
Yes, rates and home prices have increased somewhat since the end of 2012, but homes are still incredibly affordable. Those who decide to buy a home today will avoid higher prices and mortgage interest rates in the future.
Contact one of our lending partners to get started on your home purchase.