First Time Homebuyer Tips : FHA loans, a better mortgage program? -- Best Programs & Why -- Part 4 of 5

FYI - these tips in this first time homebuyers series are not just for newbies/first time homebuyers)

Mortgage programs can sometimes be the death of us. In recent years, this has already happened. This can be confusing, because so many people have opinions. Opinions from loan officers, realtors, your family, friends, neighbors, and or co-workers.  What can we learn from this First Time Homebuyer Tips series? I think it goes back to the basics of mortgages, which was part 1. Am I telling you to listen to me and only me?  No, not that. You need to know that loan officer actually knows what they are talking about, because this can get you in trouble sometimes, depending on who you listen to. Some loan officers think they know it all and sound like it.  Just because someone sounds really nice doesn't mean they might be a good fit for you. The meaning behind this comment is in here, How busy are you really? --Customer Service  It's in the 3rd paragraph.  My underlining thought on this whole topic is if it sounds too good to be true, then it usually is. When shopping on your own, don't pick the very best offer. It's been proven. Go with someone trusted, a referral.  If you find someone online, which was how 19 others found me in 2008 in which I closed, get to know that person first.

So, onto the best program for you. Each borrower is different, no matter how you look at it. If you talk to me, I try to find out your goals first. No matter what you might think that you want or would need, in order for me to do my job, I need to know certain things.

• • • • • I like to start out by asking what monthly payment that you would be comfortable with.
        • How long do you plan on being in the house. Not everyone knows the answer, but it's one of the most important questions not asked often.
        • How much money do you have total, even though you might want to use less. And using less is actually better for several reasons. Ask me and I will tell you these reasons.
        • Do you have kids?  Ages?  College in the future?
          
        • Do you have other bills that don't show up on credit or appear on your pay check?

So Jeff, what is the best program?  Some people don't have much money to work with or none at all. If this is the case, I would start with FHA loans or possibly USDA loans. As it stands, you need 3 1/2 percent of your own money for FHA loans and that you can do 100% financing with USDA loans or VA loans. In my opinion and from countless comparisons, if you don't have more than 10% down and a credit score above 700, FHA loans in most cases be the best avenue for you.  This is more than my opinion. Here are several FHA vs conventional comparisons.

• FHA loans vs Conventional loans - A true numbers comparision with 5% down - Using a 710 credit score

• FHA loans vs Conventional loans - A real comparision with 5% down - Using a 659 credit score

Keep in mind, numbers don't lie, if prepared accurately. And here are some good comments that FHA loans aren't actually as bad as some say they are. How bad are FHA loans?  The main reason why conventional loans aren't as good as once before is because there are some major hits to pricing when putting 10% down or less with credit scores under 680.

Your basic types of programs:  Each has their own meaning and purpose. Ask a mortgage professional.

• FHA loans
  
• FHA 203-k loans
• USDA (rural housing program)
• Conventional loans
  
• VA loans
  
• Subprime loans

Conclusion : There are 100's of programs out there. Some are great for the consumer and then some are great for the loan officer or the lender. Wait, the LENDER?  Yes, meaning that they get more of a residual per se for selling you this specific loan. Basically, they make MORE MONEY. Now, this was more in the past than in the present. Can these types of programs be good for you though? Yes they can, but they aren't for everyone and need to be explained in detail. The problem here, they aren't explained and SOLD to the average consumer on a misconception, in which they are then misled. And don't allow a loan officer tell you that your FHA rate is much higher, because you are in a different tier. There is a slight increase when you are from a 580 to a 599. There is a much larger penalty if you are below a 580, but other than that, don't fall for the rate trap or fee trap.

Do some research on the name of the program if it doesn't sound familiar. You can basically Google anything nowadays. Do it then! As I have said many of times, a bad question is a question never asked.

The First Time Homebuyer Series :

Understanding if you should rent or buy :

• Renting vs Buying -- Understanding the difference........ FHA? -- Part 1 of 3
  

• Renting vs Buying -- Showing the difference in $$ -- Part 2 of 3

• Renting vs Buying -- Knowing your loan options -- Part 3 of 3

• First Time Homebuyer Tips : FHA - Conventional - VA - Subprime - The Basics -- Part 1 of 5
  

• First Time Homebuyer Tips : Getting Qualified & Knowing your Credit -- Part 2 of 5

• First Time Homebuyer Tips : Understanding the total mortgage process -- Part 3 of 5
  

• First Time Homebuyer Tips : FHA, a better mortgage program? -- Best Programs & Why -- Part 4 of 5
  

• First Time Homebuyer Tips : Summary - Red Flags to be aware of -- Part 5 of 5

 Buying Tips :

• What's behind a home inspection.....

• FHA Loans & Energy Efficient Mortgages...

• FHA 203-k Loans
• 
  
• Asbestos and Your Health, Tips for Remodeling your Ann Arbor Home  -- This post does talk about some specific places in Michigan, but in general, Missy Caulk gives us some great information on homes built prior to 1980 in regards to asbestos. This is a must read.

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!

Copyright © 2009 by Jeff Belonger