Knowing the ABC's of FHA Loans

Reblogger Roy Kelley
Real Estate Agent with Realty Group Referrals 16766

The rules and guidelines set forth for FHA financing are based on FHA's common sense approach to lending.  In several distinguishable ways, FHA Underwriting Standards often provide Borrowers with "the path of least resistance" for financing their home. 

 

Knowing the ABC's of FHA Loans

 

     

     Did you know that the FHA has been around since it was established as part of the National Housing Act of 1934?  Yet, there is a mystique that still surrounds the FHA (and FHA loans), even after its many decades of existence.  
     

 Contact Me for FHA Info!
     The letters FHA are an acronym for Federal Housing Administration, a department of HUD, (another acronym that stands for U.S. Department of Housing and Urban Development).


     Perhaps the biggest misconception I hear from my potential Borrowers regarding the Federal Housing Administration is that the FHA itself originates loans.  It does not.  

      FHA is chartered to insure the Mortgage Lenders that make the loans.  FHA also helps make housing affordable and "financeable" for lower down payment Borrowers (though not exclusively.  Many Borrowers choose to utilize the flexibility of an FHA loan even when they could place a larger down payment on a property.

      It's also not true that a Borrower must be a First-Time Home Buyer in order to obtain an FHA loan.  It is true however, that FHA loans cannot be used to finance investment properties, or vacation/2nd homes.

     The rules and guidelines set forth for FHA financing are based on FHA's common sense approach to lending.  In several distinguishable ways, FHA Underwriting Standards often provide Borrowers with "the path of least resistance" for financing their home. 

     What do I mean by that?  

     Here are some examples that provide an explanation ... and show how using an FHA loan can prove beneficial to you as a Borrower: 

  • Down Payment:  The minimum down payment for FHA loans is 3.5% 
  • Type of Down Payment:  FHA Allows Borrowers to receive gift funds from Family Members (and in some cases, other ways as well
  • Credit Scores:  FHA allows Credit Scores well below Conventional Loan Requirements
  • Credit Histories:  FHA allows minimal, fair, and sometimes no-credit Borrowers to qualify, pending other factors
  • Major Credit Events:  FHA allows Borrowers to rebound more quickly (shorter waiting periods) after a Bankruptcy, Short Sale, or Foreclosure than most all other types of financing
  • Co-Signing Borrowers:  With an FHA loan, Non-occupying Borrowers (typically relatives) can be introduced as Borrowers to assist in income or credit support for the Primary Borrower.
  • Employment History:  FHA is the most forgiving Loan Product regarding job tenure, job stability, length of employment, how income is received, etc.  
  • Interest Rates:  FHA loans typically run about 1/4% to 1/2% lower than Conventional Loans, when Credit Scores are equal
  • Restrictions:  FHA can be more discriminating on some property types (Homes in disrepair, Condominium Complexes, cost of Mortgage Insurance are examples)


     In my estimation, FHA loans have taken a bit of a bad rap over the years. Often they are perceived in a negative light.  Most often that is because of the Mortgage Insurance costs typically associated with them.  

     But the cost of monthly Mortgage Insurance payments can be a small price to pay when the benefits of an FHA loan are weighed in comparison by a Borrower.  And the possibility of dropping/addressing the Mortgage Insurance cost exists in the future.  (Contact me for more info or clarification.)
 
 
     But as you can see, there are many strong positives to the "ABC's" of FHA loans as well. Positives that will help Borrowers challenged by a variety of issues when other loan programs do not.
 
      It's imperative that I, as your Chicagoland Mortgage Originator, understand ALL the related pieces of your home buying transaction, credit, and finances in order to determine and suggest one loan program versus another to you.
 
      In order to do that, I'll ask you to provide me some info and documentation upon first contact. (A list of the typically required info and documentation requested can be obtained HERE).  
 
     But after this crucial portion of the process is completed and we've discussed your wants and needs together, you may be surprised to find that an FHA loan is the best (and/or only) option available to you.  


     Should you like more info regarding the FHA loan program or borrowing with an FHA loan, FHA Guidelines, or other loan products, please contact me.  I'll be happy to provide you the info you need and answer your questions. 

     I urge you to keep an open mind during our discussions and when considering lending programs.  With so many mortgage options now available to Borrowers, you wouldn't want to dismiss or overlook a good opportunity or option prior to having all the info you need at your disposal ...




    
     *   Hoping to Buy or Refinance a Home in New Lenox or elsewhere in the Chicagoland area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:
 
 
Gene Mundt
Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed
 
American Portfolio Mortgage Corp.
nmls #175656
 
Direct: 815.524.2280
Cell or Text: 708.921.6331
eFax: 815.524.2281
 

If you or anyone you know is looking for sound experienced mortgage advice and service, please contact me. I'd be honored to be of service.

 

 

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 Trulia Acct. of Gene Mundt, Mortgage Lender   Zillow Acct. of Gene Mundt, Mortgage Lender     Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender  

    

 

Gene Mundt

Mortgage Originator  -  NMLS #216987    

IL Lic. #0006220  -  WI License

American Portfolio Mortgage Corp.

NMLS #175656

                                                                    

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

Contact Gene Mundt, Mortgage Originator Today!

 

Your Referrals & Testimonials are Always Greatly Appreciated!

Email Me .. to be added to my Mortgage & Real Estate Newsletter

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Rainmaker
5,347,759
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Please be sure to leave comments at the original blog by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi .

Sep 28, 2016 07:05 PM #1
Rainmaker
4,432,093
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

This is a good post to reblog I hope home buyers will read it and learn from it.

Sep 28, 2016 08:32 PM #2
Rainmaker
5,347,759
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This reblog was not posted as scheduled this morning. I had to manually post it.

Sep 28, 2016 08:53 PM #3
Rainmaker
4,797,131
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for the re-blog Roy.  This is great information to share.

Sep 28, 2016 09:10 PM #4
Rainmaker
5,347,759
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much for your comments. It is always good to hear from you.

Sep 28, 2016 09:23 PM #5
Rainmaker
2,977,150
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

What a great re-blog Roy Kelley as most buyers getting a mortgage, are using FHA in my area. 

Sep 28, 2016 10:36 PM #6
Rainmaker
1,304,395
Charles Stallions Property Manager
Charles Stallions Real Estate Services - Pace, FL
Pensacola, Pace & Gulf Breeze Property Management

We are seeing a lot of cash buyers with the dood-frank and the low return on money

Sep 28, 2016 10:49 PM #7
Rainmaker
1,010,712
Gloria Todor
Century 21 Absolute Realty - Springfield, PA
& Doug Durren (484) 431-3686 in SE PA

Great re-blog Roy.  Many first time buyers often need to use FHA financing since the down payment requirement is lower than conventional.

Happy Autumn!

Sep 29, 2016 01:47 AM #8
Rainmaker
565,763
Denise Hamlin, Broker/Owner
Cardinal Realty ~ 319-400-0268 - Iowa City, IA
Helping Happy Clients Make Smart Choices

Thanks for re-blogging this Roy. It's good to see a positive take on FHA loans. There is so much misinformation out there 

Sep 29, 2016 01:59 AM #9
Rainmaker
5,347,759
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Denise Hamlin 

I have sold hundreds of home using FHA financing. FHA is wonderful for many first time home buyers who have limited funds.

Sep 29, 2016 02:10 AM #10
Rainmaker
219,283
Diane Beaumont
Benchmark Mortgage - Woodland Park, CO
USDA,FHA,Jumbo,VA Woodland Park, CO Mortgage

Great information. Thanks for sharing it here.

Sep 29, 2016 03:11 AM #11
Rainmaker
2,050,765
Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

Roy, I am bookmarking this post by Gene so I can refer back to it. Excellent info and presentation. 

Sep 29, 2016 05:41 AM #12
Rainmaker
1,900,588
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Roy - thanks for re blogging.  Gene Mundt always has very thorough explanations.

Sep 29, 2016 06:02 AM #13
Rainmaker
1,225,028
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Appreciate the re-posting of this info, Roy Kelley ... hoping it proves helpful to those reading it and hoping to utilize FHA financing in the future.

Thank you!

Gene

 

Sep 29, 2016 06:27 AM #14
Rainmaker
5,347,759
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thanks so much for stopping by. Your feedback is very much appreciated.

Sep 29, 2016 08:22 PM #15
Rainmaker
5,347,759
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

We have a sunny Monday morning in Maryland and life is good.

Have an outstanding week.

Oct 03, 2016 12:54 AM #16
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