FHA mortgages are not as complex as many make them out to be. They are not the next subprime mortgages. FHA loans have been around since 1934, while subprime mortgages started to come into full force back in 1994. Lastly, just because someone said that they can qualify you for a conventional loan and that it would be cheaper than a FHA mortgage, might not always be correct.
What else should you know about FHA mortgages?
- If you put 10% or less down and your credit scores are less than 680, 99% of the time, your payment will be much lower on a FHA mortgage than it would be on that conventional loan. Don't let anyone tell you differently. I can show you proof. Numbers don't lie, people do.
- FHA mortgages are not just for first time homebuyers.
- They are not just for those with less than perfect credit.
- You can do up to a 95% cash-out with a lower rate than you can do with a conventional loan up to 90% LTV.
- You need only 3% of your own money out of pocket.
- You can get into a home with no money out of pocket with the help of down payment assistance programs. One example is the Nehemiah Program. Stay away from those that say you can do 100% with FHA. There is no such beast. But you can still do creative financing to make it look like 100%, but there is no 100% financing. That is false and misleading no matter how you view it. Creative FHA financing -- No money out of pocket from the buyer!!!
- It's the only true residential type of mortgage that can be manually underwritten with great rates.
- Bankruptcies allowed -- discharged between 1 to 2 years after the bankruptcy. FHA Credit -- Understanding what works
- You can have a non-occupant co-borrower help you obtain a FHA mortgage. FHA -- Non-Occupant Co-Borrowers, are they allowed?
- You can buy a family members house and use the equity as your source of down payment and for closing costs. FHA Gift of Equity Loans
- I can do credit scores down to 500, even after a bankruptcy, as long as the credit fits the profile. Many companies can't do below 580 and some under 620 on FHA mortgages.
Make sure you seek a mortgage professional that can help you find the right programs, answers all of your questions, and is able to offer any program out there. Each consumer is different with different needs.
Some things to pay attention to when shopping for any kind of mortgage.
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For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
There is a very widespread misconception out there that FHA is for First Time Homebuyers and there are special savings for First Time Home Buyers. They are always asking for the Special First Time Home Buyers FHA info.
Jeff! I love when you talk FHA! I had a loan officer here tell me that you could not use a non owner occupant as a co borrower.
Thank you and as always have a blessed day!
LENN..... I totally agree 110%.... when I tell a client that there is no special savings or programs, they tell me that I am wrong or I don't hear back from them... It's just a loan officer or lender using it as a marketing ploy to get more business or get that client into the door. thanks, I am going to add your last part to this blog, that there is no special rates and such. It's misleading.... but in many cases though, rates will turn out lower or better on a FHA loan than conventional because of the pricing hits now implied on conventional loans.
JIMMY...... I just added this part to my blog after you had asked a question. It's a great question and not many lenders can do these types of loans down to 500, even on a BK... but the credit has to be clean and nearly perfect after the bankruptcy discharge.
In regards to the borrowers needing money down. Between seller help and such programs as Nehemiah, that buyer could get into the house with no money out of pocket. Now, we typically like to see that buyer put out at least $500 of their own money out of pocket, no matter what. Need just a little skin into the deal. Other than that, that's it... so that is still nothing if you really think about it.
JESSE...... I am going to check your profile now to see what area you live and work in. But yes, non-occupant co-borrowers is a huge part of some people getting into homes. Now, you can't use a non-occupant co-borrower to help buy with credit, just income qualifications. And thanks for the compliment.
JASON..... I agree, education will play a huge role in lending in the next year. So many consumers out there are getting misleading information more than ever. Thanks for the polite compliment.
LARRY.... Only 1.9% on '05 and '06? Where did you get that? That seems way to low.. I would have said at least 10%..... but it was because so many lenders were using subprime instead of FHA. And you wonder who it benefited... the loan officer, making it easier for them, not the consumer. SAD. I could see FHA easily clearing 30% of the market. But so many lenders are still not approved FHA and they put the client into the next best deal, conventional.
LORINDA..... thanks, my pleasure. In regards to that lender...... they should be shot. Making a mistake, okay... but if you aren't sure, ask first. Is this a loan officer that you use? Your office uses? Just passing by? You should send that person to this post and to my non-occupant co-borrower post. FHA -- Non-Occupant Co-Borrowers