Guest Author: Mondie Pic'l
Many people have a misperception about FHA financing.
It is too expensive, it's more difficult to qualify and FHA has very stringent requirements about the property.
The truth is that FHA financing has some wonderful uses that may help many home buyers and homeowners.
- The most obvious is that it is the ONLY program
that allows the buyer to purchase a home with a 3.5% down payment all of which
can come from a gift. Conventional financing requires a 5% down all of which
must come from the home owner. - FHA is the only program that allows for a parent
who is not going to occupy for the property to qualify for the loan. The primary occupant does not have to
even have an income as long as the parent/non occupant co borrower's income is
sufficient. Conventional financing requires the person who is occupying the
property to fully qualify for the loan. - Borrowers who have low FICO scores and a smaller
down payment will often have a better rate on an FHA loan than a Conventional
loan even after mortgage insurance is calculated into the equation. Low FICO
scores on Conventional loans often push the rate much higher than a similar FHA
Loan - FHA will allow an individual who has recently
sold a home as a short sale to obtain new FHA Financing if:- They
were current on their mortgage and Installment debt at the time of their short
sale - They
are purchasing a home of lesser value and smaller than the home that was sold
via short sale. - Short
Sale lender accepted proceeds from short-sale as payment in full.
- They
READ MORE: Life After Short Sale or Foreclosure
Typically three years must pass
after the short sale for a buyer to be eligible for new financing.
- Homeowners with loan amounts up to $729,755
(this loan amount will depend upon the county in question) who cannot obtain a
conventional refinance due to the depreciation of their property may qualify
for an FHA refinance up to 96.5% of their home's value. Depending upon the loan amount the
maximum financing for conventional loans is 80% with loan amounts over $625,500
and 90% with loans under $625,000.
FHA
financing is an excellent tool for first time home buyer's with limited funds
and income to qualify for a new home. It allows for more flexibility in credit
criteria, lower down payment and parameters that often make it easier for a
buyer. With recent changes
purchasing a condominium has become more difficult with FHA financing. The
Condominium project must be FHA approved. Your lender can look this up on the
FHA web set and provide you with a list of approved projects in a selected
area. A project can also be
approved on a case by case basis but plan on at least a 60 day period for the
lender to complete the FHA project approval process.
The
most important element to FHA financing is to work with a lender that has
expertise in this product and understands when FHA financing would be the more
beneficial over conventional financing. FHA is not for everybody but in many
cases gives homebuyers and opportunity to purchase they wouldn't have had
otherwise.
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Mondie Pic'l is the Branch Manager for Fairway Mortgage She has over 25 years
mortgage banking experience and has demonstrated a lasting commitment to
providing personalized customer service.
Please feel free to visit Mondie's web site at www.mondiepicl.com.. Her
direct line is 626-233-1303
