Real Estate Investing

Come summer, several new policies by the FHA will change the face of federally backed home mortgages.  The FHA announced in a press release today what we’ve been expecting for several months … their eligibility rules are changing.  The changes are expected to strengthen the FHA financial reserves while continuing to make homes affordable during the housing recovery,

The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement.

The proposed changes should take effect by summer and include:

• Increase MIP by 50 bps to 2.25 percent and shift premium (if legislation allows) to life of the loan rather than up-front at closing.
• New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.  This hearkens back to the old days when I first bought a house… we had to have a significant amount for a down payment rather than “$200 gets you in!”
• Decrease allowable seller concessions from 6 percent to 3 percent.  Again, this means the buyers will have to have more money to close. According to the FHA press release, the current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
• Increase enforcement on FHA lenders to include reporting lender performance and enhancing the monitoring of eligible lenders.

I believe consumers should be most concerned with the higher credit scores.  The seller paid closing costs shouldn’t be too big because if you’re working with a really good lender, these costs should not exceed 3 or 4 percent anyway (depending on your situation).  At 3 percent, that concession should just about be enough to cover closing fees if the seller agrees to pay.

If you’re concerned these changes will shut you out of owning real estate, then you need to be looking now … while you can also still qualify for the $8000 or $6500 home buyer tax credit!

The tallest building in the world is formally opening today.  The Burj Dubai held its grand opening today in the United Arab Emirates and houses a hotel, 1000 condominiums, 57 elevators, 162 floors, and the world’s highest swimming pool.

According to Business Week,

The Burj Dubai is so tall that Bedouins can see it from their oases 100 kilometers (63 miles) inland and sailors can see it from their supertankers, 50 nautical miles out in the Gulf—at least on the few winter days when the air is as clear as it’s portrayed on the mural in front of the model apartment window.

The tower is so enormous that the air temperature at the top is up to 8 degrees Celsius (14 degrees Fahrenheit) lower than at the base. If anyone ever hit upon the idea of opening a door at the top and a door at the bottom, as well as the airlocks in between, a storm would rush through the air-conditioned building that would destroy most everything in its wake, except perhaps the heavy marble tiles in the luxury apartments. The phenomenon is called the “chimney effect.”

Love it or hate it, I’d travel there to see it.  Right now I’ll have to settle for a video … from the Earth to the sky.  And it’s a good thing I’m not afraid of heights.

Congratulations to Dubai’s ruler Sheikh Mohammad Bin Rashid al Maktoum on this accomplishment which could now easily become the top man-made wonder of the modern world!

Photo from The Burj Dubai Skyscraper.

Concept houses can be really interesting.   We have tiny houses, storage buildings converted to houses, cave houses, tree houses, and now…. now we may be getting airplane houses.  The idea was conceived by an entrepreneur right here in my own community – an airplane converted to a house.  But not just any airplane house, according to World Net Daily – one that can withstand hurricane force winds.

Simply put, Bennington is looking to plant a Boeing 727 on a fixed bearing 15 feet above the ground, allowing the plane to rotate 360-degrees into the direction of the wind. The 1,200-square feet of interior space would be decorated with any luxurious furnishings according to the taste of the owner. 

In addition to living quarters (once stripped of all the seats and overhead storage bins, there could be lots of room), the plane could serve as a radar station during questionable weather.  Tom Bennington, the inventor who has a patent on the design, said,

…the first aircraft/residence/weather vane would gain massive media attention, and news and weather crews could even broadcast from there during hurricane season.

I hope it does get massive media attention because I’d love to see the plan(e) in action.

Photo from World Net Daily.