Just called BofA, stated their no closing costs program now requires 10% down (don't know if this has always

Asked by S, Long Beach, CA Fri May 23, 2008

been true). So, we were planning on putting down between 5-8%, it looks like FHA is our only option, right? Does anyone know if interests rates or cost of carrying an FHA mortgage are more expensive than conventional loans through a bank?

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Irina Netcha…, Agent, San Marino, CA
Fri May 23, 2008
Hi S,

FHA just increased their limits on loans. That's the great news.

Costs of carrying an FHA loan are going to be a little lower than conventional since the seller will need to pick up some of the closing costs. There are MIP costs (mortgage insurance) that you will need to check into. These property mortgage insurace costs (PMI for Traditional mortgages) wil lhave to be carried with a conventional 10% down loan anyways.

FHA is definitely worth exploring.

I am doing a whole series on FHA loans that you might want to check out. The link to the first post is below.

Best of home purchasing to you S!
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Debt Free Da…, , 85260
Fri May 23, 2008
There is not such thing as a no cost mortgage, they just raise the rate to cover the costs. It is deceptive advertising.
Web Reference:  http://getprequalified.com
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Julia Huntsm…, Agent, Long Beach, CA
Fri May 23, 2008
Dear Ms. HomeBuyer, Updated info on FHA loans is that the rates are not always so low, in fact recently they've been equal or greater than conventional rates. Yes, there are expenses to an FHA loan, but the goods news is there are some buyer assistance program for down payment, and one program is allowed for coverage for both closing costs and down payment, negotiated with seller. Also, after June 1, there could be a return to lower down payment conventional loans now that California's designation as a "declining market" has been removed by FNMA. When exactly this might be, it's hard to say. But for more information on FHA loans, Please contact me for more information. (562-896-2609)
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Ray Calnan, , Los Angeles, CA
Fri May 23, 2008
Another potential advantage to FHA is that the loan may be assumable when you go to sell the home. Not a big deal now, but it is very likely that when you go to sell your property interest rates will be higher. If you can provide the buyer with a better rate, then you can sell your property for more or faster or both.
Web Reference:  http://www.charityar.com
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Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Fri May 23, 2008

FHA interest rates are actually lower than most conventional loans. You do, however, need to do a "full doc" loan, which means you have to prove both income and assets. If you can do this, FHA is actually a great way to go. I have a client closing next week with a 30 year fixed at 6%. The first year's mortgage insurance can be financed into the loan (which saves you 1.5 pts) and they have easier qualifying.

If you would like a referral to a great lender in the Long Beach area, who can possibly help you get into a home with 0% down using FHA, give me a call. Best of luck in your home buying endeavors. Long Beach is a great city to live in. I know, I have lived here 13 years and won't move.

Shel-lee Davis
RE/MAX Palos Verdes Realty
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Myke, Home Buyer, 89449
Fri May 23, 2008
BOA is actually clamping down pretty hard in a lot of areas. I wouldn't even be supprised if at some point thier 10% option wasn't available in certain areas. I know the 5% dried up around here awhile back, and was told even the 10 might be difficult to get.

Simply put - there are no additional costs to an FHA loan simply because it's an FHA.
Now - where it gets tricky, is all of that is up to your individual lender. Some lenders will charge a 1% origination up front on FHA loans no matter what (BoA does this as does Wells Fargo in many cases). In terms of some of the additional costs - again, there are lender costs that you might get - but there is no FHA specific cost. You will still have to pay MI - but that is the case with virtually any loan with less then 20% down.
If you're going to go with an FHA loan - shop around. There are some lenders out there that will use it as an excuse to tack in some additional fees or jack up interest rates. Some are better with it. Just gotta shop around.
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