FHA ALL DAY

Posted by kmcdonald on August 22nd, 2009

mortgage

As lending guidelines become tighter for conventional financing, many borrowers are turning to what, until recently, was a very underused but phenomenal program, FHA financing. Established in 1934, the FHA has insured over 34 million properties since its birth. It is very highly regulated and one of the most secure forms of financing available to both lenders and borrowers.

There are many benefits and entitlements that FHA borrowers receive. I have listed below a few of my favorites.

Low Down Payment
One of the most popular and well-known features of an FHA mortgage is that it only requires a down payment of 3.5%, as opposed to the 5-20% necessary for conventional programs. FHA allows you to keep more money in your pocket! And trust me, once you move into your new home, you’ll find that you need it for things like paint, furniture, and even new light bulbs.

Manual Underwriting
With conventional mortgages, your fate is decided by a computer. It’s either yes or no, and these days ‘no’ is more prevalent than ever. With FHA, even if the computer says no, a licensed underwriter can ask for additional materials, like a letter of explanation to provide a reason for their concerns. This can be very beneficial if certain issues—like debt-to-income ratios that are slightly high, blemishes on your credit, or little money available in the bank for fallback reserves—are holding you back.

Upfront Private Mortgage Insurance (UFPMI)
Private Mortgage Insurance is a huge benefit when it comes to FHA loans. Unlike conventional mortgages, where the monthly charges can be hundreds of dollars, FHA allows you to roll in the PMI while paying a very low monthly premium, and also will refund portions back to you when you refinance or move.

Assumable
Thinking of moving? FHA is currently the only loan in the market that is assumable. This means that when you sell your home, you can sell your mortgage with it. This can be a huge benefit to folks who lock in low rates, then sell when rates are higher. Imagine, you and your neighbor are both selling your homes. You offer a buyer the option to take over your mortgage at a 5% fixed rate, and current rates are at 7%. Your neighbor is without an assumable mortgage and can offer nothing better than that 7%, giving you a major advantage.

Efficiency Loans
Another great thing about FHA loans is that they allow you to roll in the cost of energy efficient home improvements into your mortgage. Not only do you save money on the mortgage, you also reduce your monthly utilities and add value to your home. Talk about wonderful!

203K
FHA will give you money to repair a foreclosed home that does not meet appraisal requirements for lending. This program can offer you up to $35000 to use with an approved contractor to make the repairs necessary in getting the house to the point it can be financed.

Streamline
Whenever the market moves in your favor, you can streamline refinance into a more cost effective loan with no need for income, credit or asset checks. Often, you can even complete your streamline refinance without a new appraisal.

ARM Protections
FHA-backed ARMs are some of the most amazing products currently on the market. If you will be in your home for less than ten years you need to consider them. (for more information read my previous post)

To learn more about FHA and your options contact a mortgage expert to discuss your options and benefits right away!

3 Responses to “FHA ALL DAY”

1. Eremeeff says:

   August 24, 2009 at 8:38 pm

   Greatings, Super post, Need to mark it on Digg
   Have a nice day
2. gtong says:

   August 25, 2009 at 11:35 am

   Good to hear you enjoyed the article, thanks for the digg!
3. Ellen says:

   September 1, 2009 at 9:46 am

   There are some funny videos about FHA guidelines posted on YouTube by interthinx. Here’s a good one.
   http://www.youtube.com/watch?v=voEeubnGY58