While the FHA loan process of the past was sometimes difficult and cumbersome, it has now become the savior of the real estate market. In the wake of the sub-prime crisis, FHA loans have now become the darling of the industry. Why? Because they are now easy! Consider this:
• Just like conventional loans, FHA loans can be underwritten via automated underwriting systems. As long as you are using a competent lender, you will get a rapid approval.
• FHA loans now use the same appraisal process as conventional loans and require the same repairs as conventional loans. No more, no less.
• The rate on a 30 year fixed FHA loan is comparable to a conventional 30 year fixed. FHA rates are based upon different funding sources and occasionally have a small variance in price, but not much. Now that conventional loans have enacted rate adjustments based upon credit score and down payment, FHA loans can even be priced much better…way better.
• Closing cost are comparable to those of a conventional loan.
• FHA loans are available to almost anyone – but you can only have one outstanding at a time. Credit requirements are less stringent than on conventional loans.
• FHA loans do not have income limitations. You can earn a million dollars or more per year and use this product.
• The down payment requirement is only three percent, which can include most closing costs! The three percent down payment may be gifted.
• FHA loans do not adhere to declining market policies.
• FHA loans can be used to acquire single family homes, condominiums, and 2 to 4 unit properties.
There are a few simple restrictions that apply. FHA loans are only for principal residences. They can be used to finance multifamily properties as long as the borrower lives in one of the units. The current maximum loan limit is $297,500. Watch for that to be significantly increased this fall.
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3 comments:
Sounds great to me! That means there has to be a catch, right?
You mention that there can only be one loan outstanding at a time, is that only one FHA loan?
My question pertains to the new legislation passed in the State of MI regarding homesteading. Since I can own two residences and have them both qualify for the Principal Residence Exemption (assuming I meet all the criteria) chances are I will have 2 mortgages for a period of time. If my original mortgage is with a conventional lender can I also obtain an FHA loan for a new residence?
The answer is yes and yes. You may only have one FHA loan outstanding at any time, but that doesn’t place a restriction on other loans you may have, except of course that the payments due on any other non-FHA mortgages will be taken into account in determining your debt ratios for financial qualification.
Selling real estate for almost 40 years now and using FHA a lot over the years, it is really a great loan program to use now and one of the few that still allows seller's concessions and 3.5% down payment. The requirements are much less restrictive now. Check into it or call a Realtor. Ruthie
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