Pasadena Real Estate

To continue with my series of FHA posts, today, we're going to look at advantages and disadvantages of getting an FHA loan.

ADVANTAGES:

• LOW CASH OUTLAY - Pasadena buyers can get an FHA loan for as much as 97% of Pasadena home purchase price.  Only 3% down, not a bad deal.
• FHA LOANS ARE FULLY ASSUMABLE.  Yes, you read it correctly.  These loans are assumable as long as the new buyer qualifies and is not an investor.

• FHA LOANS DO NOT HAVE A PREPAYMENT PENALTY.  FHA loans do not have penalties for paying off all or part of the loan before the scheduled term. This feature also gives the FHA buyer the opportunity to refinance the loan to lower interest rates if rates decline (with some additional costs involved in refinancing).

DISADVANTAGES:

• SOME SELLERS FEAR FHA APPRAISALS:  There are some sellers and real estate sales people who would prefer not to sell their homes to buyers seeking new FHA loans. This stems from past appraisals which were lower than the sale price or had extensive repair requirements. While the appraisals still may be a roadblock in some areas of the U.S., FHA now uses independent "fee" appraisers rather than FHA "staff" appraisers, which has eliminated many of the discrepancies.

• LOAN PROCESSING TIME: FHA loans generally take about 2 weeks longer to process and close than conventional loans. Normal FHA processing time is 4-6 weeks, compared with 2-4 weeks for conventional loans. However, many FHA lenders are now approved for automatic loan approvals which can speed up processing substantially.

READ MORE: What YOU need to know about FHA Loans - Part I

                          What YOU need to know about FHA Loans - Part II

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