Low home prices. Historic interest rates. Tax credits. Stimulus packages. Bailouts. There's a lot of chatter about how these factors affect the real estate market, but not enough talk about a no-brainer financing option. FHA financing is an amazing thing in today's real estate market, where lenders are getting stingy with tightened guidelines and borrower requirements. A few key points are:
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The borrower must meet standard FHA credit qualifications (there's no set credit score barometer, but a borrower's debt-to-income ratio is heavily considered).
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The borrower is able to finance the upfront mortgage insurance premium into the loan. The borrower will be responsible for paying an annual premium.
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The FHA mortgage requires a low 3.5-percent down payment, and that money can come from a variety of sources, including parent gifts and HUD downpayment assistance grants.
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Closing costs are also low - typically 3 percent of the total purchase price - and are usually covered by the seller in today's market. They can also be incorporated into monthly payments.
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Eligible properties are one-to-four unit structures, and each state has a purchase price limit ($346,250 in Arizona) for FHA loans.
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If a buyer finds a fixer-upper, the FHA 203(k) program can help the person purchase or refinance the property, with the cost of repairs and improvements included in the loan.
- FHA home mortgages aren't just for first-time homebuyers. FHA refinance loans can help people get out of toxic debt situations caused by subprime mortgages with high interest rates.
As stated above, FHA home mortgages aren’t just for first-time home buyers. FHA refinance loans can help people get out of debt situations caused by the sub-prime market with interest rates that have spiraled out of control. Are you facing default or foreclosure on a conventional loan? FHA home mortgage refinancing is a godsend for those who want to keep their homes and prevent damage to their credit ratings. There are several ways to get into an FHA home loan for refinancing. The advantages include a low fixed rate mortgage guaranteed by the FHA, predictable FHA mortgage payments and lower interest rates for those who qualify.
FHA mortgage loans should take up no more than 29% of your monthly income, and your loan officer will ask for verification of your income to make the calculation. While some people are able to get conventional loans using “stated income”, requirements for FHA mortgage products such as FHA refinancing loans require copies of your income tax returns to verify the actual amount of money you report to the government. If your job situation has changed since your last tax filing, you may be able to furnish proof of income through your new employer.
FHA home loans have requirements for income, debt-to-income ratios, maximum loan amounts and other details; each type of FHA loan is unique and must be applied for individually. Ask your lender for assistance in learning which FHA mortgage is right for you. If you aren’t satisfied with your current lender, consider getting applying for an FHA home mortgage at a new bank. Even if you have an existing home loan, you can explore your options with FHA refinancing someplace else.