FHA mortgages

Recently there have been several questions on FHA mortgages, so I decided to do a quick update on FHA loans!  FHA has had several changes in the last year or two.  One of the biggest is that if you put down the minimum required (3.5%), the monthly mortgage insurance is there for the life of the loan.  The monthly mortgage insurance is also higher than most conventional loans at 1.35%.

Even with those new rules, FHA is still a very popular mortgage.  One of the benefits to FHA mortgages is that you can sell your home with an assumable mortgage.  You will list your home just like you normally would, but if the buyer is interested in assuming your mortgage, it is an option.  At that point you would contact your own lender, talk to the assumption department and get your buyer qualified.  They do need to qualify for the mortgage and will be responsible for the mortgage.  You as the homeowner will get a release of liability so you will not be responsible for the mortgage after closing.

FHA also allows you to buy with a slightly lower credit score than conventional loans.  They also allow you to buy as early as one year after a bankruptcy or foreclosure, if you meet FHA guidelines.  Otherwise, you need 2 years from the date of discharge on a bankruptcy and 3 years after a foreclosure. 

FHA allows for non-occupant co-mortgagors, so that can help you qualify for a home.  The seller is allowed to pay up to 6% in seller paid closing costs if needed.  That can help you with all your closing costs and maybe allow you to buy down the interest rate.

If you currently have an FHA mortgage, you can do a streamline FHA refinance to lower your interest rate.  This is one of the easiest refinance programs available.

FHA is still a great program for a home purchase and definitely has it's place in mortgage lending.  Along with some of the benefits, it also typically has lower mortgage rates too!

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants, NMLS#150953 – EmailWebsite

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Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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