Why Are You Getting An FHA Mortgage?

By
Real Estate Agent with Coldwell Banker Professionals

 

 

why are you getting an FHA mortgageWhen an Oakland or Lapeer County home buyer comes to us with a pre-approval letter for an FHA mortgage we will ask both you and your loan officer “Why FHA?”

It’s not that we are FHA snobs or don’t want to work with FHA buyers, but FHA does come with its own baggage. Baggage that affects you the buyer, not me or anybody on my team. We are very experienced dealing with FHA buyers, and FHA is a good program for the right buyer. But it’s not for everybody.

FHA is good if you have bruised credit; it is a program that is more forgiving of less than perfect credit. And what better way to repair credit than making a house payment on time for a few years since your house payment will probably be lower than the rent you are currently paying.

Some people need to go FHA because of their debt to income ratios. FHA allows you to carry more debt than conventional mortgages do.

But if your reason for going FHA is solely because of down payment you may want to find another lender. A big part of a loan officer’s job is to fit you with the loan that is best for you.

Two of the biggest issues with FHA loans from the buyer perspective: 1) Many sellers have heard too many horror stories and are somewhat biased against FHA buyers. You want your offer to be as strong as possible and an FHA offer will make you come across as a weak buyer. 2) You will be paying mortgage insurance for the entire life of the loan.

Until recently if you could show 20% equity after a couple years, you could drop the mortgage insurance from your FHA mortgage. But the rules changed last year and if you want to drop the mortgage insurance you need to re-finance to a conventional loan. And with today’s rates under 4% do you really think you will get that rate in a few years?

There are now conventional mortgages with as low as a 3% down payment. Once you find a house you can lock into today’s low low super low rates and not wonder and hope for the next 3 or 4 years that the rates don’t go up a per cent or two.

www.Search-The-MLS.net

www.JackieHawleyRealtor.com

photo from Raymond Bryson Flickr

Posted by

Jackie Hawley, Realtor, ePro

ReMax Encore
Cell: (248)736-6406
Jackie@JackieHawley.com 
www.MiRelocation.com 

 

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Buyer Information - What Buyers Need to Know in Today's Market
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Jackie, I just had a client settle with a conventional 5% down loan, and a boatload of seller concessions.  And he started out thinking FHA.  We had a terrific loan officer put it all together.

Jan 26, 2015 08:58 AM #1
Rainmaker
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Jackie Hawley
Coldwell Banker Professionals - Oxford, MI
Southeast Michigan Real Estate

Patricia- There are too many low down payment options available to stick someone with mortgage insurance for the net 30 years. Thank you for reading my post

Jan 26, 2015 09:07 AM #2
Rainmaker
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Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

I enjoyed your post and I was glad Patricia put it on her weekly summary page this week!

Jan 31, 2015 11:07 PM #3
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Hi, Jackie!  You can find this post on today's "Last Week's Favorites". 

Feb 01, 2015 07:32 AM #4
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Jackie Hawley

Southeast Michigan Real Estate
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