Since 1934, the Federal Housing Administration, (FHA) has offered home ownership assistance to Americans in the form of FHA financing. The program originated to combat the effects of the Great Depression, when the rate of foreclosures and loan defaults were high and home ownership for the average American was very low. In response to the recent economic downturn, modifications have been made to the FHA program. Now there are even more reasons to consider FHA financing.
1. FHA financing allows home-buyers a low down payment alternative for their home purchase. The minimum down payment is a low 3.5%. Click here to learn about Down Payment Assistance in Missouri.
2. Low interest rates and very reasonable closing costs. With an FHA loan it is permitted for the closing costs to be paid by the seller, by the LENDER, or as a gift from a relative, non-profit, or government agency. This can make a home purchase possible with very low out of pocket expenses. Click here to see how a lender can pay your closing costs!
3. Even borrowers with less than perfect credit may qualify. FHA has several mortgage options that have a minimum credit score that is required for all applicants, but it tends to be much lower than conventional mortgage programs.
Have you been turned away because you credit scores fall from a 580 score to a 640? Click here to find out how you can get an FHA mortgage now!
4. FHA loans are not just for single-family homes. For qualified borrowers, they may be available for 1 to 4 unit properties. The homeowner must live in one unit, as FHA loans are strictly for owner occupied homes, but the additional units can be rented out helping to offset the mortgage cost or generate income. Alternatively a multi-unit home could be used to accommodate a large, extended family.
5. There is a specialty FHA program available (203K loans) that allow the cost of buying a fixer-upper and making the necessary repairs to be financed in the mortgage. This is a great program to purchase bargain homes that need a bit of repair, buy the home at a low price, finance the repairs and have a home with equity. Click here to learn more about the FHA 203k Renovation loan.
6. Another specialty FHA loan is designed to keep Senior Citizens in their homes, allowing them to borrow from their equity to provide cash to live on. This is called a Reverse Mortgage.
7. The Energy Efficient Mortgage (EEM), also from the FHA, is designed to finance the expense of energy efficient home improvements. Home owners can improve their own property and make a positive impact on the environment.
8. FHA loans have much more flexible underwriting guidelines, over conventional mortgages, to fit today’s home buyer. Much higher debt to income ratios, the FHA mortgage provides for a non-occupant co-borrower to help a new home buyer qualify for a new loan.
9. In addition to loans for a home purchase, there are also FHA programs that offer funds for refinancing and debt consolidation. Cash out refinances to 85% loan to value, and for a rate and term refinance you can utilize a 97.75% loan to value. This is very useful in today’s lower home values environment.
10. FHA mortgages are assumable, which means after you have owned you home for a while and are ready for another new home the mortgage interest rate you currently have can be assumed by the new owner of your home. This is a great selling tool when you have an interest rate lower than the current market rate.
To learn more about the FHA mortgage program and other mortgage programs that can help you purchase your next new home please feel free to contact me. I welcome the opportunity to answer your questions, find down payment assistance for your new home purchase, provide you alternatives that will save you money and give you a great interest rate, or refer you to another lender who may be able to help when I cannot.