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TAKE ANOTHER LOOK AT FHA...BETTER THAN CONVENTIONAL!

By Paula Swayne

Real Estate Agent with Dunnigan, Realtors, Sacramento (916) 425-9715 CalBRE # 01188158

February 23, 2009 03:34 PM

A local mortgage broker came to our office today to explain the latest with FHA. I was so impressed, I thought I would share it. So, here goes!

FHA CONVENTIONAL

Great current interest rates Great current interest rates

3.5% Down Payment 5%-30% w/ additional costs for lower down payments
<30% down, fees increase from .25% to 1% points

General underwriting more relaxed Getting stricter due to Fannie Mae bailout provisions

Maximum 6% seller contribution Maximum 3% seller contribution

$417,000 Maximum loan amount $417,000 Maximum loan amount

620 Minimum Credit Score Requirement 680 minimum w/higher fees for scores under 740

Loan officers may order appraisals Appraisals must be ordered thru independent serv.

There is more for investors, but there are some real benefits to FHA these days, especially the appraisal differences and the down payment, not to mention the credit score requirements!

www.PaulaSwayne.com

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Great concise summary! Thanks for the post!

Jason Sanders

Feb 23, 2009 03:40 PM

Erik Hitzelberger

RE/MAX Alliance - Louisville REALTOR-Luxury Homes - Louisville, KY

Louisville - Middletown Real Estate

Paula - FHA loans in our area have increased from about 12% last January to 25% this year. As your chart shows, they have great upside for buyers with less than stellar credit and/or those without a lot to put down.

Feb 23, 2009 03:41 PM

Eric Lowery

Keller Williams Realty Professionals - Spring, TX

I'm all for putting buyers in homes, but I wonder how often we stop to think about how the high LTV loans have affected our economy. Buyers who purchased homes with high LTV loans are one of the primary reasons that homeowners are foreclosing and/or unable to sell (read: compete with foreclosures) in today's market.

I'm not saying that we shouldn't offer them, but sometimes I wonder how much these "better" loans bite us in the rear a few years down the road.

I started reading your post and somehow ended up playing devils advocate with the comparison. This comment wasn't meant as a complaint, but the thought occured me while I was reading and I thought I'd share.

Feb 23, 2009 03:47 PM

TIM MONCRIEF

Tim Monciref - Austin, TX

Over 2,000 homes sold…..

Depending on the area..... Where I am at, FHA was cut to $271k, so it is not a viable product for me yet, until they bring it to conforming rates. That may just happen.......

Feb 23, 2009 04:11 PM

Paula Swayne

Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA

Realtor-Land Park, East Sac & Curtis Park -Dunniga

Hi Jason!
Thank Marcia Evans with Evans Mortgage - she supplied the information...I just passed it on!

Hi Erik!
With the advantages, I think the numbers will continue to grow.

Hi Eric!
I completely understand what you are saying. However, I do think that possibly the pendulum has swung a bit too far the other way. This gives buyers some options that they may not otherwise have...and they still have to have strong credit.

Hi Pete!
I agree that FHA has a place that it hasn't had in a long time.

Feb 23, 2009 04:13 PM

Paula Swayne

Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA

Realtor-Land Park, East Sac & Curtis Park -Dunniga

Hi Tim!
They are adjusting ours as we speak. The expanded loan amount is going to go from $474,950 to $580,000. In Sacramento, this change was needed.

Feb 23, 2009 04:15 PM

Vickie Nagy

Coldwell Banker Residential Real Estate - Palm Springs, CA

Vickie Jean the Palm Springs Condo Queen

It's a double whammy. Not only is the downpayment lower, but the credit score requirements are much lower. FHA is the way to go!

Feb 23, 2009 04:37 PM

Shawn Murray

Omaha, NE

I'm seeing a lot more of my buyers going FHA than concentional. They ask me what is the best way to go as far as loan types. I try to educate them on the differences between conventional & FHA & 90% of them go FHA.

Feb 23, 2009 04:43 PM

Paula Swayne

Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA

Realtor-Land Park, East Sac & Curtis Park -Dunniga

Hi Vickie!
I think the appraisal advantage is going to be huge...Just wait until May 1st when they implement the new law! It is going to be a fiasco and FHA doesn't apply!

Hi Shawn!
I think FHA is going to be big for the forseeable future.

Feb 23, 2009 04:59 PM

Julie Chroust

Julie Chroust, Senior Loan Officer Bay Equity LLC - Walnut Creek, CA

(925) 381-1481 jchroust@bayeq.com

One of the best benefits that no has spoke about that FHA offers is the Streamline

Refinance. For those currently in an FHA loan they can do the following:

FHA Streamline refinances are offered with No appraisal, No employment verification, No asset verification, No underwriting, No money out of your pocket, No occupancy requirement.

Thousands of homeowners are taking advantage of FHA's Streamline refinance They are realizing that they can lower their interest rate without having to provide all the traditional income and asset verification.

When you choose an FHA Streamline Loan, you can refinance your existing FHA-insured loan with less paperwork and lower costs than you would have with other home loan refinancing solutions.

Refinancing your current FHA loan can be an easy and streamlined process. You can do a streamline refinance even if you just purchased your home in the last few months or several years ago. No appraisal is needed, value is based on last FHA appraisal.

I have lowered several of my past clients interest rates down to 4.875 with NO closing costs just this month! Apparently not enough people know about this or think they can't do it if they just purchased their house... NOT TRUE. There may be no late payments on the existing FHA loan in the past 12 months.

Feb 23, 2009 05:00 PM

Kevin Cavanaugh

Keller Williams Hudson Valley Realty - Tappan, NY

Lic. Associate Broker, ABR, GREEN

Paula, that is good to know in a nutshell as you have put it. Thanks again and have a great day. kevincavanaughonline.com

Feb 23, 2009 06:24 PM

Lisa Wetzel

RE/MAX Realty Affiliates - Carson City, NV

CDPE, SFR carsonvalleyland.com

Paula - Amen! FHA is working well for us! My 21 year old son is cosing his first home this week!

Feb 23, 2009 07:02 PM

Paula Swayne

Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA

Realtor-Land Park, East Sac & Curtis Park -Dunniga

Hi Metrocities!
Streamlining is definitely another advantage.

Hi Kevin!
I always need things put succinctly...especially since I am a very visual person. I am glad it helped!

Hi Lisa!
How exciting for you and your son! Are you going to be spending some move-in time there?

Feb 24, 2009 11:59 AM

Myrl Jeffcoat

Sacramento, CA

Greater Sacramento Realtor - Retired

Paula - I was sitting here chuckling to myself. I can remember when real estate agents witnessed FHA raise their limit to $225,000. That was quite awhile back however:-)

Feb 24, 2009 01:35 PM

Paula Swayne

Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA

Realtor-Land Park, East Sac & Curtis Park -Dunniga

Hi Myrl!
Actually I remember writing quite a few FHA offers...then we had the boom of crazy loans and no one was using them. I think they are now a great tool!

Feb 24, 2009 01:57 PM