I thank you so very much for your prior business and referrals. I know many of you have benefited by the low rates, and low fees associated with the FHA program. If not, I’m sure all of you know at least a hand full of people who have benefited from the FHA program. For those people who may be looking in to getting in the housing market in the next year or so, and will be working with less than 10% down, please pass this information along to them…
Although, FHA loans may have fell out of grace for a few years, since 2008 they have rebounded in popularity! The FHA Loan has been around for a long time, since June 27, 1934. The Department of Housing & Urban Development folded the Federal Housing Administration (FHA) under its umbrella in 1965.
FHA loans began to lose favor in the late 1990s, when home values began to inch upwards, surpassing FHA mortgage limits, and sellers balked at FHA’s more stringent appraisal guidelines. Since then, those appraisal guidelines have been relaxed making many FHA offers on par with Conventional offers. Here are some facts about the FHA Mortgage Loan…
1. The FHA loan has low closing costs. Some buyers elect not pay Lender Charges, but to have the Lender pay them a credit for taking a slightly higher interest rate.
2. FHA interest rates are less sensitive to pricing increases for credit scores under 740 than conventional loans.
3. FHA interest rates are typically lower than Conventional interest rates.
4. FHA Loans Are assumable! When you go to sell your home, a new buyer can take over (assume) the remaining years on your low Fixed FHA rate providing they qualify.
5. Many FHA appraisals do not require repairs. For many homes that are well maintained and in good shape, it is not unusual for a FHA appraisal to not require repairs. Mainly, the appraiser is going to note safety and health hazards to be corrected, for example broken windows, flaking paint, etc.
6. Multi-Family Homes up to 2 – 4 family homes, are allowed to be financed with a 3.5% down, FHA mortgage if one of the units are to be owner occupied.
7. Although recommended, FHA does Not require a Well or Septic report as condition of the loan approval or closing unless the property is near an active farm.
8. Most FHA loans can be closed within 3 – 4 weeks of the Lender receiving a fully executed purchase agreement.
9. FHA requires only a 3.5% down payment and some or all of the money can be Gifted from a close relative. Example: $120,000 sales price x 3.5% down = $4,200 minimum investment.
10. The cost of an appraisal for a FHA appraisal can be collected at closing (or paid for by the Lender).
11. FHA does not require 2 years in the same line of work for the qualifying of full time salaried or hourly employees.
12. FHA allows parents to co-sign for Income purposes, for children who will occupy a property (helpful for children who are self t have a full 2 years of commissions to avg.).
13. FHA is not limited to 1st time home buyers
14. There are No Income limits for FHA buyers
15. FHA max mortgage limit in West Michigan is $271,050 for single family, and higher for Multi family homes.
16. FHA only requires 3 years from a prior foreclosure or short sale vs. 7 years for a conventional mortgage