When it comes to mortgages, there are a lot of options to sort out.  When I am working with clients, they often ask me about mortgage rates and down payments, and the answer can vary.  

In Part 1 of this series, we will take a look at FHA mortgages.  This is meant to be an overview - a licensed Loan Officer will help you examine all of the options more closely to help you determine the right choice for you.

FHA mortgages (Federal Housing Administration) can be used by first time OR repeat buyers.  The main draw is the low downpayment requirement and the favorable interest rate.  

Other FHA details:

Minimum Down Payment: 3.5%

Mortgage Insurance:  Required if the down payment is less than 20%.  This premium is paid upfront and monthly.

Minimum Credit Score: 620, but the interest rate will usually be higher if your credit score is lower.  With a better credit score you will get a better rate.

Ownership Type: To be used on your primary residence only.

Property Types: Single family, 2-4 units, Townhomes, Condos.  (Condos must be on the FHA approved list to qualify.)  You can use FHA financing to fund an investment property of 2-4 units if you are living in one of the units as your primary residence.

Maximum Loan Amount: This will vary by county, but as of January 1, 2012, in Adams County, it is $406,500.  Keep in mind that this is the amount after your down payment.

Pros: Low down payment, low interest rates, easier qualifying, lower minimum credit score.

Cons: Upfront mortgage insurance and monthly mortgage insurance, payment may be higher than conventional due to mortgage insurance and lower down payment.

Keep in mind that mortgage insurance is tax deductible.

Wondering whether you have enough down payment to live in your dream neighborhood?  Call me at 720-341-5235 to find out what's available in Henderson, Thornton, Northglenn, Broomfield, and Westminster!

Jennifer Prestwich, REALTOR®

Your Castle Real Estate

 
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2 Comments on Mortgages 101 - an Overview of FHA Mortgages by Jennifer Prestwich your North Suburban Denver REALTOR®

JAN
12
2012
237,013 Points 1 Featured Post Outside Blog Hit Router Called Shot Master

Good information. FHA has become an important program in Northern California for home buyers. Thanks,
8:57am • #1
JAN
23
2012
229,297 Points Outside Blog Attended Rain Camp Called Shot Master

Jennifer -- on these FHA loans, there is a minimum of about 5 years of Mortgage Insurance (even if you put 22% down.)  Otherwise the MI goes away when the balance reaches 78% of the original loan.
4:38pm • #2

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