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In Spite of Recent Rulings There are Advantages to FHA Mortgages
The April 2016 New FHA Ruling
In April of this year, the government made a new rule that MIP would be required to remain on the loan throughout the term, as opposed to dropping off at a certain loan to value ratio.
You will read and hear a variety of opinions regarding mortgage loan products, so it does not hurt to become an informed buyer and weigh the facts for yourself.
Even some real estate agents do not understand the differences between FHA and Conventional financing. Because of this these agents inadvertently exclude a large segment of potential buyers from their seller’s home that they are marketing.
The Advantages to FHA Mortgage Loan Financing
FHA loans are flexible and have lower down payment requirements than most other mortgage loan products. Many buyers in today’s economy do not have 20 % or more to put down on a home. Nearly 1 in 5 U.S. buyers uses an FHA loan to finance their purchase. They may have everything else in place but not be liquid enough for such a large down payment. With rental rates skyrocketing in many markets, it makes sense for families to purchase a home as opposed to paying rent. Can you see if you were a homeowner trying to sell a property how many potential buyers that would over looked if your agent marketed only to cash or conventional prospects!
FHA Downpayment Requirement is 3.5% of the sales price
For many home buyers, there are only a few mortgage products available for such a low down payment, unless you can qualify for a VA loan with 100% financing.
FHA Allows 100% Gift Funds
There are very few, if any, other mortgage loan products available that will allow a home buyer to receive a gift for the down payment amount.
There are Numerous FHA-Approved Lenders Available
The marketplace for FHA mortgage loans is large, and it pays to shop around for rates and terms. This environment creates competition, which is always good for the consumer.
There are different Types of FHA Loan Products Depending on Your Needs
A home buyer can qualify for and obtain 30 and 15-year-fixed-rate mortgages as well as a series of adjustable-rate mortgages. Also, the FHA insures loans for properties that may need some improvement made to them. These specialty loans, such as the 203b which enables the buyer to finance the rehab costs into the mortgage amount. Another mortgage product the 203k loan will allow the borrower to finance energy-saving improvements into the loan on new construction.
FHA has Flexible Credit Standards
Of all the different types of mortgage loans products available FHA loans are more forgiving in many ways. Therefore, underwriters look at the entire credit file as opposed to just considering the credit score. Many times isolated credit events will be reviewed and taken into account on an individual basis. The waiting period after bankruptcy and foreclosure events are more lenient under FHA guidelines.
These are but a few of the advantages for home buyers considering an FHA mortgage loan. I would like to invite you to give me a call, and we can talk about what works best for you in regards to mortgage financing and home ownership.
I look forward to hearing from you!