FHA HOME LOANS – WHAT YOU NEED TO KNOW

FHA HOME LOANS – WHAT YOU NEED TO KNOW

An FHA loan is a government insured loan.  They are very popular for 2 reasons:

1.)  High Loan to Values – FHA will allow you to loan up to 96.5% of a home’s value on a purchase and rate and term refinance.  You can also loan up to 96.5% Loan to Value when combining multiple mortgages as long as the 2nd mortgage was taken out over a year ago and credit has not been drawn on the mortgage/line of credit for the last 12 months.

2.)  Low Credit Qualifications – FHA loans are fairly easy to qualify for.  Some lenders will do these loans with a minimum of a 580 FICO score.  You must be 3 years out of a foreclosure.  2 years out of a bankruptcy / short sale.

What you need to know about an FHA loan:

1.)  FHA charges a 1.75% upfront mortgage insurance fee on the majority of its loans.  The one exception is an FHA streamline on an existing FHA loan taken out before June of 2009.  Sometimes a lender can eliminate this fee by giving you a higher rate and paying the fee for you.

2.)  FHA also charges a monthly mortgage insurance fee.  Here are the monthly mortgage insurance guidelines.  To get your mortgage insurance amount – take insurance percentage, multiply times your loan amount and divide by 12.

30 YEAR FIXED FHA LOAN – or loans terms over 15 years

95% LTV and below:         1.75% upfront MI                 .85% Annual MI

Over 95% LTV:                   1.75% upfront MI                 .8% Annual MI

15 YEAR FIXED FHA LOAN – or loan terms less than 15 years

0-90% LTV:                      1.75% upfront MI                 .45 % Annual MI

Over 90% LTV:                    1.75% upfront MI                 .70% Annual MI

 

ALL FHA STREAMLINES LOANS – original case number pulled before June of 2009

 UPFRONT MI                      .01%

ANNUAL MI:                       .55%

30 YEAR FIXED FHA LOANS OVER $625,500 – or loans terms over 15 years

95% LTV and below:          1.75% upfront MI                1.00% Annual MI

Over 95% LTV:                    1.75% upfront MI                 1.05% Annual MI

15 YEAR FIXED FHA LOANS OVER $625,500 – or loan terms less than 15 years

0-90% LTV:                        1.75% upfront MI                 .70% Annual MI

Over 95% LTV:                    1.75% upfront MI                  .95% Annual MI

3.)  FHA’s monthly mortgage insurance must be paid for the life of the loan.  

4.)  FHA allows for a streamline refinance.  A streamline refinance is a new loan lowering your existing rate.  You can do these without paying for a new appraisal or qualifying again based upon credit and income.  There are a some guidelines to the streamline refinance:

-You must have been current on the mortgage payment for the past 12 months.

-If you do a streamline refinance without an appraisal, the max loan amount is the payoff of your existing loan + new FHA upfront mortgage insurance.  Because of this, most customers focus on 0 to low closing cost loans as all costs and prepaid items must be paid for out of pocket.

-You can finance closing costs into the loan on an FHA streamline, but you must get an appraisal and finance below the 96.5% loan to value.

-FHA does not allow you to lower the term on a streamline refinance unless you qualify again with appraisal, credit and income.

5.)  If you refinance from an FHA loan to a new FHA loan within 3 years, you will get a portion of the 1st mortgage insurance you paid back.

6.)  FHA has max loan limits determined by county.  To check your county’s FHA loan limits, visit:

http://www.fha.com/lending_limits.cfm

In Summary, FHA loans are great loans for a customer looking to purchase without putting a lot of money down.  They are also great loans to refinance with low equity or lower credit scores.

FHA loans do a lot of things that a normal conforming loan does not.  It helps many consumers get a loan they otherwise would have not qualified for.

Reggie Green / Branch Manager at Fairway Independent Mortgage Corporation

480-206-5577  /  reggie.green@fairwaymc.com

NMLS #229993,  AZ – BK 0913980,  Fairway NMLS:   2289,  Equal Housing Lender. 

Scottsdale Mortgage , Scottsdale Loan Officer, Scottsdale Direct lender, Top Scottsdale Mortgage Loan Officer, Arizona Mortgage, McCormick Ranch buy local, McCormick Ranch Mortgage, Gainey Ranch Mortgage, Scottsdale home loan, Scottsdale Refinance, Scottsdale home purchase loan, Arizona home loan, Arizona loan officer, Phoenix Mortgage, Phoenix Home Loan.

FHA HOME LOANS – WHAT YOU NEED TO KNOW

Advertisements

Leave a Reply

Name and email address are required. Your email address will not be published.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

You may use these HTML tags and attributes:

<a href="" title="" rel=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <pre> <q cite=""> <s> <strike> <strong> 

%d bloggers like this: