The Advantages of FHA Loans
In many regions of the U.S., FHA loans have not been utilized for years, so a lot of real estate agents and mortgage originators aren't familiar with this great resource. The following are a just a few of the recent changes that have made FHA loans a more attractive option again for some
consumers looking to buy a new home or refinance an existing one:
1) Congress passed the Stimulus Act of 2008. During the recent housing boom, home values surpassed FHA loan limits in many regions of the U.S. The recent enactment of this important legislation, however, increased FHA loan limits up to $729,500 in many high-cost regions of the U.S. through the end of the year. FHA loan limits vary by county, so give us a call for loan limits in your area.
2) The FHA changed its appraisal and fee negotiating guidelines. In the past, many sellers steered clear of FHA loans because the appraisals were too strict and certain fees were non-negotiable. The FHA has greatly loosened these guidelines to make it easier for both buyers and sellers.
3) FHA loans are much cheaper now. Because FHA loans are federally insured, they tend to trade at a higher premium in the secondary market.
This means lenders can often charge a lower rate.
Other FHA Benefits
• FHA loans are not credit-score driven. Borrowers can have a lower score than other products and still qualify for a good rate.
• FHA loans require as little as 3% down.
FHA loans allow down-payment assistance programs. This allows the seller to cover the buyer's down payment and closing costs.
This means borrowers, especially first-time buyers, or move-up buyers with limited funds, have a real opportunity of getting into a home with little or no cash at closing.
For sellers, this means you can offer concessions that make marketing your home without having to lower the price of your home again.
• FHA loans allow
a) Sellers to finance all of the buyer's costs to close;
b) Homeowners to take cash out up to 95% of the home's value;
and
c) Homeowners to consolidate a first and second loan up to 97% of the home's value.
If you or someone you know is thinking about buying or refinancing a home, give us a call. We'll see if an FHA loan is right for your financial goals and needs.
Source: The Loan Tool Box
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