I bought a house with 25 percent down and being charged for PMI insurance, what should I do? The Loan I got is a FHA loan.

Also, what are the pros and cons of an FHA mortgage?

On an FHA loan, when is PMI dropped from the monthly payment? Is it when the principle reaches 80% of the original loan or when the principle reaches 80% of appraised value of the home?

Everyone has been asking what the FHA loan rates are, but keep in mind that the absolute lowest rate is not always available.  When getting qualified for an FHA loan, they must be qualified at the highest FHAloan rate to ensure that the correct parameters have been met.

You can use an FHA calculator to plug in different rates so you can see what different payments are going to look like. While interest rates haven’t reached 1%, they are the lowest they have been in years.  With the large inventory of homes that you have to choose from, finding a home you like should be an easier task.  This simply depends upon the town you are looking, and how much you can afford.

Keep in mind that when looking for FHA loan rates, the loans are not actually funded by FHA.  They just simply the insure the loan for the lender when the borrower defaults on the loan.  You need to find a professional that works with FHA loans so that they can tell you what the FHA loan rates are currently.

There are adjustable rates, but FHA typically doesn’t produce a lot of variable rate loans.  The FHA loan rates are low enough right now, that you should really consider getting into a fixed rate loan, that way you will not have to refinance ever again.  I can say with experience, having been in the business for over 19 years that I have not seen the rates so low. I am confident that if you were to refinance or buy a home this year, you are going to have a rate you will want to hang onto.

Recently, I have seen FHA rates as low as 4.72% on a 30 year fixed mortgage. It has been interesting to see what the market has done over the past few years.  Although it has been a tough market, and homeowners have struggled, there are many programs that have been implemented to help them, and the market fell in favor of those who were looking to buy that last year weren’t considering it.

According to Bankrate.com, the 30 year fixed mortgage rates are at 4.125% today, and the 15 year is at 3.75.  This is a really interesting diversion from the 6.25% we were looking at two to three years ago.  Keep in mind too, that your FHA rates might vary according to state, due to the market in your state.

For more information, you can visit www.fhaloansnow.net.  Happy rate shopping!

Conventional Loan Requirements

Will a FHA Loan be right for me?

Fha Loans will not be the right fit for everyone, they may not provide you with the money you need for a substantial size mortgage. But for the right qualified borrower they can be of great value to them, you can put as little as 3% down, other benefits are…

Financing For Home Improvements Through Programs

Loans May Be Assumable

Zero Prepayment Penalties

Financial Hardship Assistance

Down Payment/Closing Cost Options

If you have above average credit you are encouraged to check out other available options, and then compare them to FHA Loans.

However if you have below average credit you are highly encouraged to investigate all the possibilities that the FHA offers.

FHA Mortgage Insurance Program

HUD (Department of Housing and Urban Development) reside over the FHA Mortgage Insurance Program that was designed to make homes affordable to a majority of Americans.

Upfront mortgage insurance premiums 1.5 % plus ongoing monthly premiums rolled into your monthly payment can be more costly than private mortgage insurance, also your collected insurance premiums will be used for payoff in case of default.

Fha Loan Requirements Breakdown

Find FHA approved lenders in your area for consultation

Less stringent guidelines for credit history and scores

Housing expenses not to exceed 29%

Debts not exceed 41% of total income

Caps on loan amount by region

Several loan types offered

FHA Loans can offer smaller interest rates and down payments

Options available other than savings for down payments

Programs can allow for home improvements with interest deferred payments while in construction phase

As always do your homework talk with your local qualified FHA specialist or approved lender and compare your information against non FHA options available to you.

FHA loans requirements make it much less difficult for people to acquire that dream of owning their very first home, or getting that first refinance on the property that means so much to them.

The Federal Housing Administration otherwise known as the FHA promote numerous possibilities of home ownership for people to take advantage of when taking that first step towards the American Dream of owning their very own home.

FHA Loan what is it?

By definition it means that the loan is backed up against the possibility of default by the FHA. Which in turn means the lender will not be stuck with a mortgage that has to be written off due to a borrowers misfortunes.

As a result of this FHA Guarantee financial institutions are more willing to make these types of loans, and for larger amounts and less limitations.

Can I Qualify?

If you are contemplating this sort of loan you will need…

Reasonable Credit

Reasonable Debt To Income Ratio

There are no income limitations such as you would find with the first time home buyer programs that are available today.

I was told by someone that depending on the loan the interest rate can go down but not up on some FHA 30 fixed rate mortgages. Is this true?
I know its fixed and I know what that means but it is a FHA loan. For example I also heard that they can be assumable which standard loans are not. Are they also not assumable? Have I been missinformed here also?

FHA Closing costs differ from conventional mortgages by the amount the lender can charge and the amount of insurance coverage homeowners are required to have. FHA mortgages are the last of the government sponsored mortgages. Fannie and Freddie started out as a government charter but privatized over a decade ago. Since FHA is government operated, there are specific safeguards which have been designed to protect borrowers from paying too much closing costs. However, as is the case with most government programs, there’s loopholes.

When lenders and brokers close a loan, they all incur cost during the process. These costs are passed along to the borrower in the form of higher rates, or closing costs that are added directly to the closing statement (HUD). In the past, lenders have been known to be very liberal when applying their fees; these extra charges are called “junk fees.” Before you apply, you should insist that the lender disclose their fees on a form called good faith estimate (GFE, you can print a blank form from the link below.)

If you look at your GFE you will see a grouping of fees on the left hand side. Each fee is labeled 801, 802, and so on. These are the lenders fees. FHA has strict guidelines pertaining to the fees that lenders are allowed to charge when closing a loan. Unfortunately, they are very open-minded on the amount of discount points and origination points that they allow lenders to charge.

Lenders are allowed to charge one origination point and two discount points plus the “usual and customary” third party closing costs that FHA deems relevant. If you combine those fees with the additional money that the lenders can earn from “marking-up” the interest rate; lenders could make as much as $12,000 profit on a $200,000 loan.

In all fairness, most lenders don’t fleece their customers like this, however some do. If you are considering taking out an FHA mortgage I advise you to look at your good faith estimate carefully. If you see discount points listed in the “800” block of numbers do not close your loan. Some lenders will give very compelling arguments as to why they need to charge them, don’t believe it. By disallowing the lender to use discount points, you have effectively forced them to keep their closing costs in-check.

Another difference in charges that you will see over conventional mortgages pertains to the insurance each agency requires when taking out the loan. Conventional mortgages (Fannie Mae, Freddie Mac) will allow borrowers to forego the mortgage insurance if the loan is less than 80% of the appraised value. Not so with FHA, when you take out an FHA mortgage you will be forced to have mortgage insurance regardless of the loan to value. The exception is when you take out a 15 year mortgage, if your loan is less that 90% of the value of the home you can forego the monthly mortgage insurance.

Also, FHA charges an up front mortgage insurance premium (MIP). This is a one time, lump sum that is added on top of your loan. The MIP is calculated at 1.5% of the mortgage’s loan amount, i.e. a $100,000 mortgage would become a $101,500 loan amount. This premium is refundable on a prorated basis but, the formula that is used to calculate it is stored in the same warehouse that Indiana Jones keeps his worldly treasures.

When you begin to add up the differences between FHA closing costs and conventional mortgages, it would appear that FHA mortgages have the higher closing. However, it really depends on what your specific circumstances are as to whether or not an FHA mortgage is right for you. If you have good credit and a low loan to value, a conventional mortgage is definitely the best road to take. Even if your loan to value is a little high, you may still want to consider a conventional mortgage. A conventional mortgage charges PMI just like an FHA loan does, however it can be easily removed one the home falls below 80% loan to value, unlike FHA mortgage insurance.

On the other hand, if you have average credit and a higher loan to value FHA becomes the clear winner when choosing the most beneficial loan. The most important reason is that FHA is not a credit score driven product. FHA is a common-sense loan, meaning your credit score doesn’t have a bearing on your ability to get approved. FHA looks at the property, the income, the job stability and the overall responsibility the borrower has exercised in the last year. Of course there are more guidelines, but you get my point. Not to mention that FHA allows homebuyers to put as little as 3% down when buying a home.

Getting an FHA Purchase Loan

There are so many reasons to choose an FHA purchase loan, before looking at other options. One of the main reasons is when you are a first time homebuyer, you may not have a lot of money to put down on the house. With FHA you can put down as little as 3.5% down, and the seller can also contribute up to 3% as well. With the rates as low as 5.75%, you can definitely keep your payments low and more manageable.

Why Choose FHA Over Conventional?

An FHA purchase loan gives you benefits that you can’t with other conventional loans. The main one is the competitive low interest rates. Rates have not been this low in 50 years, and the average FHA rate is around 5.75%.  The rates are lower because the government insures these loans for lenders.

FHA purchase loans also give you the option of a lower down payment, being as low as 3.5% down, versus a conventional loan which requires a minimum of 10% down or more. Your down payment can be the result of gifted funds from a family member or friend, or even a charitable organization. With a conventional loan, everything must be verified which can make for a hectic paper trail.

In addition, you don’t have to be perfect to get an FHA loan. While you still have to qualify you won’t have to have perfect credit. In fact, it is easier for you to qualify after having had a bankruptcy in your past or even medical collections. Don’t let that deter you from applying for a loan, and if you don’t qualify I will tell you why so that you know what steps you need to take in order to do so. FHA structures their guidelines so that it uses commonsense underwriting guidelines.

What Types of Purchase Loans are Available?

Almost all FHA purchase loans are fixed rate mortgages, so your rate will never ever change during the life of your loan. FHA has a long history in fact they have been around since 1934, so they are in this for the long haul. It’s nice to know that if you come upon hard times, that there is assistance with FHA. Hopefully, that is something that you will never encounter, but FHA makes those options available for you just in case.

What are the Steps for an FHA Purchase?

The most important step when considering an FHA purchase loan is to know how much you can afford. There is a very specific calculation that is used to compare your current gross income to your existing debts in order to determine the maximum loan amount that you qualify for. Determining what you can afford, will also be determined by your down payment and interest rate.

Trying to determine just how much you can get for a maximum loan amount may not be the wisest consideration, but you need to be realistic about the monthly payment that you are comfortable with. It is all about having a personal budget and if you don’t have that worked out it cause you a lot of problems.  When you visit our website, you should really take the time to use our FHA mortgage calculator. That will show you what numbers to plug in so you can accurately determine what you qualify for. In addition, double check the county you live in for the FHA lending limits.

The next step is to get prequalified before you start shopping for a home. This is the essential step, and realtors won’t work with you until they know that you have a prequalification in hand. Once you have that, you can begin the process of searching through a wide array of homes. Then, once you have found one you are interested in you can make an offer.

For more information on FHA, or to being your FHA purchase loan qualification, just visit www.fhaloansnow.net, and fill out the form today. It only takes a few minutes to complete.

Bad Credit? No Credit? No Problem! Guaranteed Approval Loans Are Available Up To $25,000
Bad Credit Loan Sources

I was told for an FHA loan it is 6.25%. Someone else tells me that it’s 7% for a conventional and FHA. Is the rate different the higher your FICO score is?
0 down, FICO score 640, Debt $8900 car, $1000 credit cards, Excellent credit history, BK 2 years ago. Loan amount $245.
Excellent credit history since BK.