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It was a tough week on Wall Street but the mortgage rates ended a little lower for the third week of January. While China takes steps to slow its econominc growth and President Obama proposes new restrictions in lending the US is expected to lead to slower econominc growth at home.
FHA announced three major changes to help them build capital and reduce their risk. The first was to tighten it’s belt on credit scores. With FICO scores changing from 500 to 580 on buyers with less than 10% downpayment. Another major change was the increase in upfront premium from 1.75% to 2.25%. They also reduced the maximum seller contribution from 6% to 3%. The change in upfront premium will increase in spring and the other changes will happen over the summer.
With next Wednesday’s Fed Meeting we have to hope for better news.