Gregg Knight of ApprovingSocal.com felt it is important to share more informaton about the benefits of FHA loans as the industry has changed and continues to do so.
FHA Loans Allow a Blemished Credit History
If your credit is less than perfect, FHA might be the loan for you. The benefits of Fha is that you may qualify for a loan even though you have had financial problems.
- FICO scores can be lower than those for a conventional loan.
- Bankruptcy. You can obtain an FHA loan two to three years from the date of your bankruptcy discharge, as long as you've maintained good credit since your debts were discharged.
- Foreclosure. If you keep your credit in excellent shape since a foreclosure, an FHA loan will be available to you two to three years from the final date of your foreclosure.
FHA Loans Boast Competitive Rates & Terms
Today's terms are pretty straightforward. In fact, in many markets the rates and terms are better than those for 80% / 20% piggyback loans.
- There is little or no adjustment to the interest rate for an FHA loan, as the rates vary within .125 percent of a conventional loan.
- Mortgage insurance can be added or funded into the loan. The current rate of that MIP has changed from 1.5% to the reduced amount of 1%. The monthly premium did however increase from .55 to 1.15. In addition, a small portion for the mortgage insurance premium is added to the monthly payment, It used to be far less than private mortgage insurance premiums.
- As of January 1, 2011, Borrowers can finance 96.5% of the purchase price and put down 3.5 percent. In some instances, when combined with other types of loans, the down payment can be zero. For owner occupied properties, gift funds are allowable.
- Allowable debt ratios are higher than the debt-ratio limits imposed for conventional loans. We can even get someone into another FHA loan immediately upon closing a Short Sale as long as they have not had any Mortgage lates within the previous 12 months prior to the Short Sale.
FHA Loans Demand Fewer Repairs
At one point, FHA repair demands were so excessive that sellers would discount the list price to buyers who would agree to obtain conventional loans over FHA loans. Today the FHA repair guidelines appear more reasonable.
- Defective roofs that leak still need to be replaced but an older roof does not necessitate replacement if it doesn't leak. It will be determined by the inspection reports.
- Windows that stick upon opening or have cracked panes do not require replacement. That doesnt mean that it might not be a good idea to replace them but another example of the differences in FHA loans.
- FHA appraisals do not take the place of a home inspection, never have. Buyers should still obtain a professional home inspection.
FHA loans are available to anybody but are used most often by first-time home buyers and low- to moderate-income buyers. However, there are no income limit qualifications.
If you have any questions about FHA Loans and or how to get prequalified, please call or email "The Gregg Knight Team", or go to http://www.approvingsocal.com
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