Over the last few months, I have seen a increase in the use of FHA Loans. I have probably been involved in more transactions with FHA loans in the past few months than I have been in the first 8 years of my career. In the Atlanta market in which I work, there has not been a big demand for them. Due to the changing mortgage market, FHA loans are becoming favorable. FHA Loans have several advantages over conventional loans, including lower down payments and more relaxed credit-qualifying guidelines. The federal government created FHA loan programs to encourage homeownership throughout the country. The FHA can help people to obtain a loan with little or no down payment. The FHA does not supply the loan; it simply insures the loan to limit the risk to the lender.
Benefits of a FHA mortgage:
- A 3% down payment, as opposed to a 5% down payment on traditional loans
- Low monthly mortgage insurance
- Low closing costs, which are regulated by HUD
- No credit score requirements
- Qualify for a loan two years after a bankruptcy
- Qualify for a loan three years after a foreclosure
- Seller can contribute up to 10% of the loan value in closing costs
- Borrowers can mortgage up to $769,000. In 1/09, the limit will be $362,000
The borrower is required to pay an insurance premium upfront, but this premium can be financed into the loan amount directly. The borrower must also pay a monthly premium, which is .5% of the total loan amount divided equally over 12 months. Unlike a conventional loan, the FHA requires a termite report and clearance, as well as a few other property condition standards, to qualify for a loan.
If you want more information, please feel free to call on me to help you PILOT THE PERFECT MOVE.
