Learn how to appraise your own real estate…just like the pros
How To Appraise Your Own Home

When you are looking at the different loans available to purchase or refinance, it can be confusing.  Over the past year there have been many changes in the underwriting guidelines for all mortgages.  FHA has become a very popular choice for many home buyers.  Let’s take a look at the basic differences between an FHA loan and a conventional loan.

FHA stands for Federal Housing Administration. FHA insures loans that are made by approved FHA lenders, they do not lend directly to borrowers.  FHA provides lenders with insurance in case a borrower defaults on their loan. 

Fannie Mae and Freddie Mac are government sponsored enterprises (GSE).   Their mission is to provide stability and liquidity to the U.S housing and mortgage markets.  These GSE’s also do not lend directly to borrowers, but they help to ensure that the banks and mortgage companies have funds to lend at affordable rates.  These types of loans are typically conventional loans.

The FHA underwriting guidelines are generally more liberal than on a conventional loan.  The minimum down payment required by FHA is 3.5%.  All of the down payment can be a gift from a family member.  The seller is allowed to pay up to 6% of the purchase price towards the buyers closing costs.  To be eligible for the 6% from the seller, it must be negotiated in the purchase contract. The minimum credit score that most lenders will allow on an FHA loan is 580.

At this time, the minimum down payment on a conventional loan is 5% – 10%.  Due to the lack of private mortgage insurance available, most lenders are requiring that the borrower have a minimum credit score of 720 for a loan to value of 90% – 95%.  The seller can pay up to 3% of the purchase price toward the buyers closing costs. However, they can only pay the non-recurring costs.  They are not allowed to pay the recurring costs such as taxes, insurance or pre-paid interest. On an FHA loan, they can pay both recurring and non-recurring costs.

One of the other benefits of an FHA loan is that they will allow a non-occupant co-borrower to co-sign on the loan.  The income of both the borrower and co-borrower will be combined and used for qualifying.  On a conventional loan, the owner occupant must qualify at 35%/43% ratios unless higher ratios are approved by the Automated Underwriting System.

Another difference between conventional and FHA loans is regarding private mortgage insurance.  FHA mortgage insurance is required on all 30 year FHA home loans regardless of the loan to value.  FHA has a monthly mortgage insurance premium and an upfront mortgage insurance premium.  Even though it is called an upfront mortgage insurance premium, it is usually financed into the new loan.  On average, the upfront premium is 1.75% of the loan amount.  Once you have paid on the monthly mortgage insurance premium for a minimum of 5 years and the loan to value is 78% or below, you can get rid of the monthly mortgage insurance.  Speak to your current lender for requirements to remove the PMI.

Conventional home loans also require private mortgage insurance; however, they only have a monthly mortgage insurance premium.  They do not require the upfront MIP.  Also, conventional loans usually only require mortgage insurance on loan to values that are over 80%. You can have the mortgage insurance removed from your conventional loan once you have paid for 5 years and the loan to value is 80% or below.  Check with your current lender for specific documentation needed to have your PMI insurance removed.

Above is just a few of the differences between conventional and FHA home loans.   For more information or to contact me directly, please visit http://www.yourmtglender.com.

FHA home loans make it Easy to buy a Florida home.

FHA mortgage loans have been helping Florida homebuyers become homeowners since 1934. How does FHA help? The Federal Housing Administration (FHA) – which is part of (HUD), provides FHA mortgage insurance to insure private FHA mortgage lenders to protect them against loss. The mortgage insurance allows private Florida lenders to lend up to 97% of the purchase price and allows financing with No Minimum credit score requirement for Florida homebuyers.

Easy Qualification – The FHA mortgage loans insure private FHA lenders against loss for loans made to properly qualified FHA home loan mortgage applicants. So you’re likely to find FHA loans with terms that make it easier for you to qualify.

Minimal Down payment Requirements – FHA mortgage loan can work with as little as 3.5% down and those funds can come from a family, grant , or your employer. Although the FHA loan does not have a zero down mortgage option yet, you will find that there are many Florida down payment assistance programs to help you with the down payment.

Less than A-1 Credit is Okay – The FHA home loan program exists to expand the pool of home buyers. Even borrowers with prior bankruptcies or mortgage loan lates get approved every day for FHA loans to buy or Refinance homes in. The FHA loan program uses credit quality, not credit score!

Lower Cost Over the Life of the Loan – Florida FHA loan rates are extraordinarily competitive. FHA’s lower risk to the lender means a better rate for the Florida borrower.

Safeguards for Borrowers Who Get Behind – FHA loans also allow the lender more options in helping borrowers who fall behind keep their homes are get current again: special forbearance, workouts, even free mortgage counseling. Further, HUD can allow the lender to take past due payments and move them to the end of the loan and in some instance will actually pay your past due payments for you. Options to save your home you’ll never get from a conventional loan! In an uncertain world, this is another excellent reason for you to get an FHA loan.

Options for Manufactured Housing – Under certain conditions, you can even secure an FHA loan for a Mobile Home or manufactured home using a Florida FHA mortgage loan.

FHA Loans Are Fully Assumable – When you are ready to sell your Miami home, you can offer buyers FHA financing! All FHA loans can be assumed by qualified buyers.

Florida home buyers should know the many advantages of the FHA mortgage loan programs. FHA loans were created to help increase home ownership. For the Florida home buyer the FHA program can simplify the purchase of a home, making financing easier and less expensive than a conventional mortgage loan product. Some highlights of the Florida FHA loan program include:

Minimal Down Payment and Closing costs.

Down payment less than 3% of Sales Price Gifts are allowed Seller can credit up to 6% of sales price towards closing and prepaid costs. 100% Financing available No reserves required. FHA regulated closing costs.

Easier Credit Qualifying Guidelines such as:

  No minimum FICO score or credit score requirements. FHA will allow a home purchase 2 year after a Bankruptcy. FHA will allow a home purchase 3 years after a Foreclosure.

http://www.fhamortgagefhaloan.com/

When reviewing the FHA mortgage applicants  credit and credit report, the FHA mortgage lender must pay particular attention to the following:

The lender must determine the borrower’s payment history of housing obligations through either the credit report, verification of rent directly from the landlord (with no identity-of-interest with the borrower) or verification of mortgage directly from the mortgage servicer, or through canceled checks covering the most recent 12-month period. The FHA mortgage applicant must explain in writing all inquiries shown on the credit report in the last 90 days. The borrower must explain in writing all collections and judgments.  Extenuating circumstances include serious illness or death of a wage earner, but do not include the inability to sell the house because of a job transfer or relocation to another area.  Additionally, the FHA mortgage lender must document that the FHA mortgage applicants  current situation indicates that the events that led to the bankruptcy are not likely to recur.

 Past Chapter 13 bankruptcy does not disqualify a FHA mortgage applicant from obtaining an FHA-insured mortgage provided the FHA mortgage lender documents that one year of the payout period under the bankruptcy has elapsed and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time).  In addition, the borrower must receive permission from the court to enter into the mortgage transaction. 

Every time you get an appraisal, a “management company” between the appraiser and the lender charges you $300 – $500 dollars, and keeps over 50% of that fee, for doing nothing. This is a new rule, home-owners should be outraged. Your getting poor quality work.

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FHA refinance loans seem like my best option at the time for refinancing my home loan. Can anyone provide me with some information pertaining to the current fha rates?