Financing in Brigantine>Question Details

Janet Michel…, Home Buyer in Brigantine, NJ

Are there any advantages or disadvantages to getting an FHA loan?

Asked by Janet Michello, Brigantine, NJ Thu Aug 5, 2010

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Cynthia Bell’s answer
Many home owners and Realtors forget that FHA is an assumable loan. A qualified buyer can purchase the home by assuming the existing mortgage of the current owner instead of taking out a new and potentially more costly mortgage. If the current owner of the home has an FHA loan with a 5.25% fixed rate loan and is 7 years into the loan the qualified buyer will get that same 5.25% interest rate with only 23 years remaining on the loan. Interest rates are at an all-time low, they can only go up from here. As a homeowner who has an FHA loan now, it can be a tremendous advantage in the future because when you sell your home the buyer can assume your loan at current the current interest rate.
0 votes Thank Flag Link Thu Aug 5, 2010
good afternoon janet....the advantages of buying fha outweigh the disadvantages...the required downpayment is 3.5%....the seller can pay up to 6% of the price of the home towards a buyer's closing costs and pre-paids....also...debt ratio to qualify can be a bit higher than conventional, and the seasoning requirements after having a foreclosure or a bankruptcy are less than conventional...there is a small monthly mortgage insurance premium as well as an upfront mortgage insurance..the monthly is waived on a fifteen year amortization as long as the ltv is 90% or less..fha guidelines allows home buyers to buy and homeowners to refinance that may otherwise never be able to come to the table....
best regards.
bob mcclure
mortgage one
brighton, michigan
0 votes Thank Flag Link Thu Aug 5, 2010
A few advantages are that the buyers down payment can be as low as 3%, the entire down payment can be recieved as a gift from a friend or relative, no pre-payment penalty, and the lender is insured against a loss during the life of the loan. Some disadvantages are that a mortgage insurance premium is required at closing, a one percent origination fee is usually charged, processing times for FHA loans may take longer as compared to conventional ones, and the appraisal guidelines are typically more stringent compared to conventional.

I would suggest speaking to a lender and have them help you make the best decision.
0 votes Thank Flag Link Thu Aug 5, 2010
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