Family Who Used an FHA Mortgage To Buy A House
Since the late 1990′s to prior to the current credit crisis, the demand for FHA home mortgage loans was limited to first time home buyers and those home buyers who less than perfect credit. Since the mortgage and real estate crash of 2007-2008, many lenders have gotten rid of other loan programs. As a result, FHA mortgage loans have become the loan of choice for many people.
Many people living in states like Arizona, Pennsylvania, Tennessee, Georgia and numerous others, are choosing FHA mortgage loans as the way to finance their first home or their next move up home.
You may not be aware of this, but FHA, which stands for Federal Housing Administration, is not actually a lender who lends you money. Rather, FHA only acts as an insurance company to insure your home loan, that you do get from a mortgage lender, in the event of default. This means that when you take out your FHA loan, you will be required to pay (up front) something called UFMIP — short for Up Front Mortgage Insurance Premium. This amount of money varies from 1.5% of your loan amount to 3% of your loan amount depending on loan program.
General FHA Mortgage Loan Highlights – Features – Benefits
- Down payment is 3.5%, but it can be a gift from a relative
- FHA home loans do not allow pre-payment penalties
- Monthly mortgage insurance is required on all FHA loans
- FHA loans allow the seller to pay closing costs
- Technically there is no minimum FICO credit score requirements, but 620 is an unwritten guideline for getting a mortgage approval.
FHA Streamline Refinance
For anyone who has an FHA loan currently, when rates drop the best refinance program for FHA loans is the FHA streamline refinance. The FHA streamline refinance is the easiest way to get a lower rate. The primary criteria to be eligible for the FHA streamline is that you have made your mortgage payments on time for the last 12 months.
FHA 203k Streamline Program
Because of the number of foreclosures in Arizona, Nevada, California, Texas, and Florida the FHA 203k streamline rehabilitation loan is great for buying bank-owned properties. The reason for this is because the FHA 203k rehab loan allows you to finance repairs right into the loan and foreclosure properties tend to need repairs.
When you finance a home with the FHA 203k loan, the money set aside for repairs can be paid directly to the contractors and up to 35,000 can be set aside. If you think the FHA 203k streamline might be an option for a home you are considering, be sure to speak with a loan officer who has experience with FHA 203k streamline loans.
FHA 85% Cash Out Program
For different reasons, many times people will want to access a portion of the equity in their home. The FHA 85% cash out program makes that possible if you have enough equity in your home. Many people find that by paying off high interest debts, they are able to get in a better overall financial position.
Summary
If you want to buy a home, buy a foreclosed home, purchase a fixer upper house, need to refinance you may want to consider an FHA home loan.