If you are looking to purchase a house in Lexington, Nicholasville, Georgetown, Richmond, Paris, or Winchester Kentucky, keep in mind the financing alternatives that can make your new home most affordable.  All of these areas have seen the FHA lending limit increase from $200,160 to $271.050 recently drastically increasing the number of homes within reach of using FHA financing here in Kentucky.

In discussing financing options recently with Kevin Weaver I realized the differences between FHA and Conventional could really make a huge difference for a lot of families when evaluating homes.  I've noticed a lot of people have mistakenly thought FHA loans were only for 1st-time homebuyers.  When in fact, these homeowners selling their first homes can truly take advantage of the benefits of FHA financing for their upgrade home purchase in the $200,000+ price range. 

Let's say you stand to net $10,000 in equity from the sale of your first home and want to purchase a home for $250,000.

Conventional Financing with required 5% down payment = $237,500. Requires investment of $10,000 net equity and additional $2,500 from savings.

Assuming 6% interest rate on a 30-yr Fixed, Principal & Interest payment= $1423.93 + PMI $154.38 + Insurance $50 + est taxes $200 = $1828.31 total monthly housing payment

Now take a look at the numbers for an FHA loan...

FHA loan based on maximum amount calculation for sales price = $248,040 with required investment of $7500 (3% of purchase price)

Assuming 6% interest rate on a 30-yr Fixed, Principal & Interest payment= $1487.13 + PMI $101.82 + Insurance $50 + est taxes $200 = $1838.95 total monthly housing payment

Using this FHA example, the homebuyer has and additional $5000 cash to retain for savings, invest, or use to make improvements to the property for only $10/month. 

** Since most homebuyers desire to make improvements to suit their tastes, wouldn't it be nice to not drain yourself of savings or rack up the credit cards to do so?  Stretching your dollars a little bit can put that dream home within reach! 

These increases to the lending limit are not permanent but designed to make more homes increasingly affordable to stimulate the market in 2008. 

Now is the time to take advantage of the opportunities to buy--ask me how!

~Heidi