What lending programs are you leaning towards in preparing to buy a home?

Asked by Johnathan Kenyon, Savannah, GA Wed Mar 20, 2013

Are you using FHA, Conventional, VA, USDA, or something else...........why?

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Bobby Crow, , Savannah, GA
Tue May 28, 2013
Each submission is correct... It would not be fair to the buyer for a lender to "lean towards" a product... it takes a full conversation to determine the most suitable loan product for the buyer.

Oftentimes, the buyer is sold a loan that is not the most suitable, and the reasons are plentiful: Ignorance on the part of the buyer, Ignorance on the part of the lender, and too-often; a greedy broker.

Best suggestion would be to find a lender that charges flat rate fees for closing costs, does not make additional premiums per product type, and one that is willing to fully answer your questions in order to show you some options, rather than one product.

If you feel like you are being sold, try another lender. There are wholesome loan originators out there, you just have to trust your instincts and find one!
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Martha P. Sw…, Agent, Savannah, GA
Wed Mar 20, 2013
I find that most buyer, that I work with, are utilizing FHA for their home purchase. The main reason is the lower downpayment and the potential for more Seller involvement in closing assistance.
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Johnathan Ke…, Agent, Savannah, GA
Wed Mar 20, 2013

Thank you for the detailed answer. It is great to hear other agents urging their buyers to "weigh" the options!
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Simon Campbe…, Agent, Miami Beach, FL
Wed Mar 20, 2013
Much has to do with the amount of down payment. I advise buyers to try to save enough to put down 20% and seek conventional financing.

Many new homeowners are looking toward the 3.5% down payment with FHA but there are changes that are coming in April 2013 that could make you pay thousands in extra fees.

New FHA borrows will need to have a credit score of at least 580 to qualify for the low down payment loan. If your FICO score is less than 580, you are not disqualified for a loan, but you will be required to put a minimum of 10% down.

Because you would be putting less than 20% down, you will be required to pay mortgage insurance. FHA has an upfront fee of 1.75% which is wrapped into your loan and a monthly fee of 1.30 % if the original loan amount to value is less than 95% and 1.35% if you put less than 5% down.

Typically, once you reach a 20% equity position, the PMI is removed. Not so with the new FHA loan changes. The insurance stays on your loan for the life of the loan. (Begins June 3, 2013)

For example, if you are paying $112.50 (borrowing $100,000) per month in mortgage insurance and you pay the mortgage for the full 30 years, you will have paid $40,500 for insurance that benefits the lender.

Make sure you weigh the long-term costs to the short term benefits before you go get a loan.
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