Chances are if you are a homeowner with an FHA loan in Georgia you have been contacted, solicited, hammered ... by out of state lenders offering you the opportunity to "refinance and close in a week with no closing costs and no appraisal". We've seen those quotes - here is a guideline for you to use to comparison shopping.
Credit Scores
You will be told, have been told and will read "FHA has no credit score requirements". Let me add - FHA does not lend money, they insure a portion of the loan. The lenders have credit score requirements. Currently the lowest I know of from any mortgage investor (the people who actually pony up the money) is 580. As a more general rule, however, a minimum middle score of 620 will be required.
Down Payment
I actually saw someone recently who proclaims to be an "FHA expert" advertising "100% Financing with FHA". This is deceiving - under the new rules FHA requires a down payment of 3.5% of the loan amount from the borrower.
Down Payment Assistance
You have erroneously read and heard there is no down payment assistance: false. What was eliminated in late 2008 was seller funded down payment assistance (and this is still figthing a weak fight in the House and Senate). Down Payment Assistance is still available from recognized non-profits such as local housing authorities and local and state government agencies. In Georgia we have the Georgia Dream Program. Down payment assistance is also still available from linear family members (parents or children) and employers. In fact your linear family member or employer can lend you the money and place a lein on your home to help guarantee repayment.
Investors Cannot Use FHA
Almost no real estate investor can purchase investment property using FHA. Obviously there are some gurus out there selling seminars to tell investors they can get an FHA 203(k) rehab loan to purchase properties. Almost completely wrong unless you have a website that ends in .gov or you have already been certified by HUD as a Community Redevelopment Corporation. However, you can use FHA to purchase or refinance your primary residence even if you own investment property.
Loan Origination Fee
When shopping for a loan there are many parts you need not only to compare but to understand. The loan origination fee is charged by the bank, lender or broker accepting the application for an FHA (or any other type) loan. These are expressed in specified dollar amounts or percentage of the loan amount. Compare those dollar for dollar.
Mortgage Broker Fee
Simply include this as a part of the Loan Origination Fee - in other words for comparison when there is an MBF simply add it to the Origination fee for comparison puproses.
All Other Fees
Some banks or brokers have volume pricing from their settlement companies they can pass along to the borrower when the borrower chooses to use that settlement company. For example the regular cost for a closing attorney in Georgia may be $450 but we have a small discount from a large firm to $400 and another smaller firm to $195 ... but compare ALL fees and charges.
Interest Rate
This should go without saying. Banks, lenders and brokers make more money the more they charge and less money the less they charge. If you're getting a quote of 7% from one bank and 6.5% from the broker and all other fees and terms are similar it's kind of easy wisdom who to pick.
Terms
Make sure you are looking at identiacl loans. A 15 year loan is cheaper than a 30 year loan (in interest charges).
Loan Size
Almost every bank will give you the option of paying closing costs out of pocket or from the loan itself. Including closing costs in the loan is not a bad thing but just make sure you are comparing loan amounts. If one lender looks like they are giving you a better deal than another bank look at the loan amounts, too. The one giving the "better deal" may be increaseing your loan amount by a few hundred to a couple of thousand dollars more.
FREE Advice
Let's be honest. I am a mortgage banker and I don't get paid unless I close loans. It is my job to make sure my customers are completely satisfied and fully understand what they are getting. I am painstakingly detailed in my explanations to applicants even when they say, "I don't need you to explain all this stuff." Here is my personal guarantee: I will never stuff you in a loan you do not understand or with which you are not fully comfortable. If you are in the southeast call me at 866-946-0120 extension 101. In the Atlanta area call me at 678-946-0101. For Georgie FHA home loans and Georgia FHA streamline refinances there is no better choice for integrety, performance and concern.
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