No one can dictate which lender or type of financing you use. What determines that is a borrowers creditworthiness, their income, and the amount of cash or other real assets they have.
FHA is just one of many types of loans available. That kind of loan has returned to popularity the past few years because it's harder to qualify for conventional financing.
If you have a high enough credit score, income, and down payment, there are many options other than available. The best person to consult would be a lender is you have not done so already.
Prudential Starck Realtors
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There are a few differences between FHA and Conventional, the biggest being when you want a home mortgage that is over 80% Loan to Value of the home. FHA charges you Mortgage Insurance because they let you go up to 96.5% Loan to Value, that means you only have to put 3.5% downpayment. FHA is a little more stringent, though not half as bad as they used to be, when it comes to the condition of the homes they will lend money on. They also charge a 1% Up front fee, called a Up Front Mortgage Insurance Premium.
Conventional mortgages requires Private Mortgage Insurance, PMI, which is where you pay a monthly fee to a company that insures the amount of the loan above 80% LTV. There is no up front fee with private mortgage insurance, but the monthly amount is usually higher and it is more difficult to qualify for.
Most properties will list what types of financing is acceptable to purchase the house with. If the bank knows there are issues with the properties that will keep it from being FHA insurable they will usually only list the options as Conventional financing or cash.
When it comes to closing costs you the buyer are responsible for them, but many purchase agreements will have where the seller makes concessions to help you pay for some or all of them. Many bank owned properties will have a set amount that the listing realtor may offer to buyers.
One other difference between FHA and Conventional Mortgages is that with an FHA mortgage the seller may cover up to 6% of the sales price towards the closing costs where with a Conventional mortgage program the seller is only allowed to contribute up to 3% of the sales price towards the sellers closing costs.
When you sit down with your mortgage professional they will be able to go in depth with both of the programs and their pros and cons for your situation.
on properties Owned by HUD . These properties are formally Bank Owned and
Received back as part of Forclosure Insurance Settlement with the bank.
HUD is many times willing to insure a new FHA loan with special considerations.
this allows for easier finance and access. Closing costs can be had up to 3% !
A house offered in this HUD HOMES program involves bidding - with "net bid " winning.
amount asked for closing costs -reduces the "net " So don't ask for what you wouln't need.
HUD HOMES require an approved Broker to bid. In any case if you are looking into
this or REO listings a broker specializing in such can save you alot of time and money.
There are some neat "hombuyer Assistance programs in Texas too. Contact me and I'll
direct you to them. Good Luck on a Deal! hope this helps.
Bob Brubaker --Highlight Realty - West Pam Beach Fl. selling HUD HOMES - Selling HUD HOMES .- In
Palm Beach County, Fla.
FHA & Conventional are very similar in many ways. A few differences to note:
1. Persons with lower credit scores wanting to put down the minimum down payment will likely use FHA because lenders do not have to adjust the rate or charge points for 'risk based pricing'.
2. The property is more scrutinized on FHA loans.
If you are putting 20% down, then Conventional might be the best loan for you.... hard to say without seeing a full application... But this has been the case on almost every deal lately.
Well, you can ask the seller to pay some or all of them. Just remember that if you do, you are really just rolling them into the loan because if the seller wasn't paying your costs you could have negotiated a lower sales price.
Please feel free to contact me with follow up questions.
FHA and converntional loans are the only 2 types of loans offered purchase a home.
Purchase a bank owned property you can pay cash the other options besides 2 listed above
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
FHA is government insured and typically requires a minimum of 3.5% down payment.
Conventional loans require typically 20% down payment.
In both cases both the buyer and seller will have closing costs.
Probably the best thing for you to do is get with a loan officer. Let them get you prequalified. They can then look at your cash situation and advise what is the best type of loan for you. They can also outline what the closing costs will be, what interest rate you will pay, and what your monthly payment might be.
This is really the first step in buying a home.