Sunday, July 30, 2017

Crucial facts about FHA loans

What is an FHA loan?

National Home Search

An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans must pay for mortgage insurance, which protects the lender from a loss should the borrower defaults on the loan. Because of the mortgage insurance, lenders can offer FHA loans at attractive (lower) interest rates with less stringent and more flexible qualification requirements to borrowers.

Here are some facts about FHA loans.

Credit does not have to be perfect!
 The minimum credit scores for FHA loans depend on the type of loan a borrower needs.  A credit score of 580 or higher can get a borrower a mortgage with a down payment as low as 3.5 percent.  With credit scores of 500-579, you will need down payments of at least 10 percent. Those with credit scores under 500 generally are not eligible for FHA loans. However, FHA will make allowances under certain circumstances for applicants who have what it calls "nontraditional credit history or insufficient credit" if they meet requirements.  Check with your FHA lender or an FHA loan specialist to see if you are qualified with a score under 500.

Down payment of 3.5 percent
For most borrowers, FHA requires a down payment of 3.5 % of the home purchase price. That's a huge attraction, especially for first time home buyers. In late 2014, Fannie Mae and Freddie Mac reduced minimum down payments to 3 percent from 10 percent, but such loans have limited availability.

FHA borrowers can use their own savings, a gift from a family member, or a grant from a state or local government down-payment assistance program to make their down payment.

Closing costs may be covered
The FHA allows home sellers, builders, and lenders to pay some of the borrower's closing costs, such as an appraisal, credit report or title expenses. For example, a builder might offer to pay closing costs as an incentive for the borrower to buy a new home. Resellers do the same as well to attract buyers to the sale of their home. (Ask your realtor to negotiate some or all of the closing costs in your purchase and sales agreement).

Lenders typically charge a higher interest rate on the loan if they agree to pay closing costs. Borrowers can compare loan estimates from competing lenders to figure out which option makes the most sense.

Lender must be FHA-approved
Because FHA is not a lender, but rather an insurer, borrowers need to get their loan through an FHA-approved lender (as opposed to directly from the FHA). Not all FHA-approved lenders offer the same interest rate and costs savings on the same FHA loan.

Costs, services, and underwriting standards will vary among lenders or mortgage brokers, so it's important for borrowers to shop around.

Two-part mortgage insurance
There are two mortgage insurance premiums that are required on all FHA loans: The upfront premium is 1.75 percent of the loan amount ($1,750 for a $100,000 loan). This upfront premium is paid when the borrower gets the loan. The upfront premium can be financed as part of the loan amount.

The second is called the annual premium and is paid monthly. It varies based on the length of the loan, the loan amount, and the initial loan-to-value ratio, or LTV. The following premiums are for loans of $625,500 or less.

Annual premiums for FHA loans
30-year loan, down payment of less than 5 percent: 0.85 percent
30-year loan, down payment of 5 percent or more: 0.80 percent
15-year loan, down payment of less than 10 percent: 0.70 percent
15-year loan, down payment of 10 percent or more: 0.45 percent

Cash can be borrowed for needed repairs.
FHA has a special loan product for borrowers. Borrowers who need extra cash can finance up to $35,000 for nonstructural repairs for items such as cabinets, fixtures, and painting. This loan is called a 203(k) loan and is not based on the current appraised value of the home. It is based on the repair cost to the home.  

Financial hardship relief allowed
FHA insurance isn't supposed to be an easy out for borrowers who are unhappy about their mortgage payments. It is a loan service that offers some relief to borrowers who have an FHA-insured loan, who have suffered a serious financial hardship or are struggling to make their mortgage payments. Such relief might be in the form of a temporary period of forbearance, a loan modification that lower the borrower’s interest rate, extend the payback period, or a deferral of part of the loan balance at no interest.


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Monday, July 10, 2017


National Home Search

If you are in the market to buy a home, the process can seem overwhelming. Here are a few things to keep in mind as you begin your home search.

Contact a local real estate agent
The first step is to find a local real estate agent who is familiar with the market which you are interested in. This alone can be a process, so make sure you are well informed. Do your research and ask questions until you find someone who is experienced and one you can trust.

Know what you are looking for
Remember it is hard to get everything you want when buying a home. So, think about what most important to you. It’s good to jot down the requirements of what most important to you. What are your must-haves and what you willing to compromise on? Communicate those needs to your real estate agent.

Consider the Cost of Homeownership
Owning a home costs more than just the mortgage payment so, budget accordingly. In addition to your monthly payments, consider property taxes, utility bills, homeowner’s insurance, and Home Owner’s Association (HOA) dues, (if there are any). You also want to think about transportation and cost of living in your new neighborhood. You may also plan on some upgrades and repairs if you are purchasing reseal home. Remember larger the home is the greater the utility and maintenance expenses.

Location Is Important
A home is only worth as much as it’s neighborhood. So, be sure that you purchase a home in a neighborhood you like to live in. Again, make a list. What kind of neighborhood would you like? If you have school-age kids, the school district might be very important to you. How far are you willing to commute to and from work? And what is the overall feel of your ideal community? If you have never visited the area that you would like to live in do so (more than once if possible). Make sure this is where you can imagine yourself living.

Know Your Loans-Financing Options
Every home loan advertisement looks great on paper but what’s in is the fine print? Make sure you know your interest rates, down payment requirements, and penalties. Make sure your loan officer go over these with you. Don’t be afraid to ask questions if something is not clear. Also, don’t be afraid to shop around and turn down loan offers that seem troubling or confusing.

Obtain Full Property Disclosure and Home Inspection
By law, the home seller is obligated to disclose any problems with the home or condo that you are buying. However, there may be additional costly repairs such as foundation problems that the current owner is not aware of. So, hire a professional home inspector to inspect the home. Your real estate agent should be able to recommend a quality home inspector. Get a professional home inspection regardless of whether or not purchasing a new or reseal home. You don’t want to buy a home that may potentially cost you thousands of dollars in additional repairs.

Get Everything in Writing.
Real estate jargon can be confusing. Get it all in writing and if you don’t understand something, make sure to ask your real estate agent. To buy a home, it is imperative that you collect each piece of information and the overall transaction in writing so, that you are covered in case something goes wrong.

Before Closing
Before your purchase is final, make sure to purchase home insurance and title insurance. In addition, consider purchasing a home warranty, if it’s not included in the transaction. On the day of closing do a final walkthrough with your real estate agent to make sure the home is in the same condition as it was when you initially agreed to purchase.

Tax deductions
Owning a home will also qualify you for certain tax deductions. It is important that you take advantage of them each year. Your tax preparer will help you get these deductions.

Get Excited
Most importantly, get excited. You will now be a proud homeowner and this is a big accomplishment. A place to call your own!The first step to buying your home is to find a local real estate agent in your area to help you. CENTURY 21 REALTY only works with the best real estate agents in each city. Let CENTURY 21 REALTY help you find your real estate agent today.

To find your dream home in Atlanta/Metro Atlanta click here National Home Search click here