FHA? I don't understand it!

By
Real Estate Agent with Vernal Utah homes for Sale Coldwell Banker ABR

Welcome to Spring of 2008! Did you know June is National Homeowners Month? This year's theme is "Back to Basics".

From the HUD.gov website: This year's theme - "Back to Basics" - is designed to underscore the importance of having strong, common-sense fundamentals as a way to maintain a sustainable housing market. Many of those basics were ignored in the lead-up to the housing bubble. HUD's Federal Housing Administration is at the center of the Administration's efforts to help qualified homeowners refinance into safer, more affordable mortgage products.

Despite many news stories that suggest that buyers must put down at least 20% as a down payment in order to buy a home, there are many loan programs that allow a buyer to put a lower down payment, or even to refinance an existing loan with a fairly high loan-to-value ratio.

One of the oldest, most stable loan programs is the FHA loan program. FHA stands for Federal Housing Administration and as you can glean from the name of the program, it is a government-backed loan program, administered by HUD.

You might not realize that the FHA (Federal Housing Administration) has insured over 34 million home mortgages, and has been in existence since 1934.

FHA loans are for ANYBODY -- not just first time buyers. FHA loans can be used on single family houses, certain condominiums, duplexes, 3-plexes and 4-plexes. If duplex, 3-plex or 4-plex, the borrower must live in one of the units, and the loan limits for these kinds of properties are higher than for single family homes.

I have started collecting FHA tips from several lenders I work with. Here are a few that I think many of you may find helpful and interesting.

** The cost for the seller to accept an offer with an FHA loan is now only the tax service fee which is about $85. It previously cost $100 - $200 in years past.

** FHA requires only 3% down. Some of the loans above the standard FHA loan limits (temporary limits by Congress) do require 5%, but some lenders offer a loan program only requiring 3% down for the temporary limits too.

** FHA does allow seller paid closing costs. The minimum contribution for funds to close by the borrower is 3% and the funds can be gifted.

Buyers, or homeowners wanting to refinance, can apply for an FHA loan through a local mortgage lender. Not all mortgage lenders can or will do an FHA loan, so don't hesitate to ask for referrals. Take the time to explore your financing options before you go home hunting, it can well pay off in valuable information.

If you would like to learn more about an FHA loan, or apply for one, simply CLICK HERE to contact me today.

Kyle

Comments (8)

Angela Lucaj
Amerigo Realty - Canton, MI

FHA is in the process of shaking the stigma of the "poor man's loan" and has been increasingly popular since the limits were raised to allow bigger spenders to buy homes in most parts of the country.  It was especially needed here in Michigan.  Since January, I have closed 4 transactions with buyers who have used FHA financing, and all went smoothly.  In part, because the lender I work with at Flagstar Bank is competent and experienced, and knows how to put it together.  It's important to have a great lender on your side.  They can make or break your deal.

Jun 04, 2008 04:46 AM
Rebecca Schrader
Competitive Insurance of Dundee - Dundee, FL

Nice post Kyle!  I do FHA mortgages in Florida and actually the buyer only needs to contribute 2.25% of the purchase price.  The seller typically can contribute 6% of the purchase price toward the buyer's closing costa and pre-paids, like interest and home owner's insurance.

So, it's possible to purchase a $100,000 home with only $2,250 out of pocket.  That's even better!

FHA is one of the ultimate tools used to finance or refinance mobile homes which are abundant here in Florida.  These are trickier loans, but I love them.

                                         Becky @  863-229-1235

Jun 04, 2008 04:46 AM
Ted Mackel
Keller Williams Realty Simi Valley - Simi Valley, CA
Simi Valley Real Estate Agent

Welcome to ActiveRain. Congratulations on your first post. Get around and check out the community, you'll quickly figure out how to supercharge your blogging skills.

Jun 04, 2008 07:18 AM
The Trumm Team Omaha Homes for Sale, Real Estate
Keller Williams Greater Omaha - Omaha, NE

Welcome to ActiveRain!

If you would like a few tips on getting the most out of ActiveRain, please visit my blog Welcome to Active Rain.  It has a few simple steps of what to do now that you have joined.

If you ever have any questions, just let me know.

Troy Trumm

Jun 04, 2008 09:23 AM
Greg Steffens
Mountain Country Realty - Lake Arrowhead, CA

Welcome to Active Rain and congrats on your first post.  Be sure to spend some time looking around at what and how others are blogging here.  It is a great education and lot s of fun.  Looks like you're off to a great start...keep it up!

Jun 04, 2008 10:51 AM
Kirk Westervelt
Van West Realty - Greenville, SC Realtor -Short Sale Expert! - Greenville, SC
Kirk Westervelt, Broker In Charge, Van West Realty - CDPE - Short Sale Agent - Home for Sale - Greenville, Simpsonvil...

Hello,

I would like to welcome you to Active Rain!

I hope to see more of your blogs in the future!

Educate us, learn from others and don't forget to have a little fun while you're at it!

Take care!

Jun 04, 2008 01:05 PM
Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hello Kyle,

Welcome to Active Rain and congrats on your first post! The opportunities to learn and network are incredible here. Best of luck to ya!

-Keith

Jun 04, 2008 02:37 PM