FHA loans continue to be the loan of choice for the majority of first time home buyers, however, there is an upward trend where non first time home buyers are utilizing the FHA mortgage loan option as well.   FHA fixed rate mortgages (15, 20, 25 or 30 year terms) offer a low down payment and provide the security of a fixed payment.  FHA financing is primarily used by customers with limited funds to close, requiring a minimum investment of 3.5% into the transaction. Conventional Loans require a minimum investment of 5%.  FHA loans is also more forgiving of credit challenges. Customers finding credit limitations with conventional financing may find a solid alternative through FHA. 

 Additional Benefits of FHA loans over Conventional Loans

• Borrowers 3.5% down payment contribution can be gift funds.
• You can obtain a better interest rate with lower credit scores.
• Up to 6% seller concession toward borrowers closing costs.
• Student loans are not counted in the ratios if deferred for 12 months.
• FHA Mortgage Insurance is much lower than Conventional PMI.
• FHA loans are assumable.

 Based upon the thorough review of a loan scenario will determine whether an FHA loan or Conventional loan meets the borrowers specific mortgage loan needs.  Unlike the past, FHA loans are much easier to do and should always be considered as a viable option for potential borrowers that want to limit the amount of funds they put into a real estate transaction. 

“Looking out for your best interest far more than just a fixed rate,”  Terry Traylor.  Call me today for a Mortgage Pre-Approval (713.705.1244) for your next home or visit my website at www.abmmtg.com.

0 comments. This is an old post. The comments are currently closed. Click here to send me a comment via email.

Coldwell Banker Mortgage Update October 2008 Volume 3/Issue 43

We’ve all seen the headlines credit squeeze, credit freeze, credit-system seizures. Mortgage companies are folding left and right and banks seem to be collapsing daily. We are all painfully aware on how severe the global financial breakdown has been, with banks unwilling to lend even to other banks.

But what about mortgages and real estate? Can you still get a home loan with less than a 20 or 30 percent down payment? Or with a credit score below 720?

Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there’s a lot more light here than in most other financial sectors. Consider these facts:

There is no shortage of money for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the mortgage market effectively has been federalized — at least for the time being. Most of our mortgages are being funded through the (FHA) insurance program, plus Fannie and Freddie. FHA is owned by the federal government, and Fannie and Freddie are operating under federal conservatorship giving all three virtually unlimited funds because their borrowings are fully guaranteed by the Treasury. When we sell loans to these entities we are going to market with pools of loans in the BILLIONS of dollars. Think of it like buying in bulk at a discount club. Our cost per loan is significantly reduced because we work with such large quantities.

Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on most of our conventional loan programs with private mortgage insurance.

FHA’s credit standards are generous and forgiving; the agency exists to help people with less-than-spotless credit histories. Fannie Mae and Freddie Mac have raised their credit-score requirements over the past year, but buyers and refinances with scores in the upper 600s can still qualify for loans having reasonable rates and fees.

Home prices have been pushed back by foreclosures and short sales have rolled back to 2003 levels or lower in many former boom markets. As a result, buyers are coming off the sidelines, making offers and writing contracts. The pending home-sales index jumped by 7.4 percent last month according to the National Association of Realtors.

So the way I see it…The prices of houses have dropped making it affordable for more buyers.

Coldwell Banker Mortgage Company has a huge supply of money and are currently closing loans in 2-3 weeks. Call your Realtor today and you can be in your new home before Thanksgiving!