FHA Loan

[Squeaky]

How does everyone feel about FHA loans? Any experiences? Any advice?

[road2freedom]

Current state, I'm not a fan. Paying a hefty up front mortgage insurance and monthly PMI for the life of the loan is absurd.

[Brian B The Loan Professor]

If it is all that you are eligible for it is great - it is a higher cost but often gets you in a home years earlier thaan other programs if you have credit issues in the past (BK Foreclosure Short sale etc)

If you can get into a conventional loan you may be better off every month with a smaller payment -

FHA only requires 3.5% down - rates arent based on scores as much so if you qualify you should get a good rate regardless of score

Thee PMI is higher now and the biggest downside is it is for the life of the loan -

the only way out is to refi or pay off the loan - getting rid of the monthly PMI can save quite a bit so most will end up refinancing at some point - of course thats if someone stays in a place that long

It isnt a bad program just not as attractive a loan as it used to be

 

 

Brian

[DallasLoanGuy]

conventional 5% down starts at 620...... only need for fha is if it won't take you in the automated underwriting

[calimom3]

Here in California we couldn't get any sellers to even accept an FHA loan. None would accept our offer. They are harder to deal with as far as requirements and owners prefer dealing with buyers who have conventional. We lost 2 homes because of that. After we switched over to conventional, our offer was accepted quickly. Sucks because now we have to put 20% down. But at least we don't have the PMI.

[alivebytime]

You can put 5% for conventional?

 

 

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[RedHairedLady]

You can put 5% for conventional?

 

 

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I was surprised by that, too. I always thought conventional required 20 percent. No PMI with the 5 percent conventional? Is there a two year waiting period after bankruptcy with conventional, or is it longer?

[road2freedom]

You can put 5% for conventional?

 

 

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Yes

 

 

You can put 5% for conventional?

 

 

Sent from my iPhone using Tapatalk

I was surprised by that, too. I always thought conventional required 20 percent. No PMI with the 5 percent conventional? Is there a two year waiting period after bankruptcy with conventional, or is it longer?

 

 

You will still pay PMI unless you put 20% down. But the good news is you won't be paying for the life of your loan, like with FHA. You have the option to pre-pay, let the lender pay in exchange for a higher rate, or pay monthly and cancel when your LTV meets the requirement. If looking at this option, ask them to run it each way so you can see what's best for you. We ended up going with the lender-paid option and then buying the rate back down with points. This resulted in the least amount out of pocket, lower payments, and a nice tax deduction.

 

I believe the waiting period is still 4 years. FHA is less and has some exceptions that make it as little as 12 months now.

Edited April 6, 2014 by road2freedom

[RedHairedLady]

 

 

You can put 5% for conventional?

 

 

Sent from my iPhone using Tapatalk

Yes

 

You can put 5% for conventional?

 

 

Sent from my iPhone using Tapatalk

I was surprised by that, too. I always thought conventional required 20 percent. No PMI with the 5 percent conventional? Is there a two year waiting period after bankruptcy with conventional, or is it longer?

You will still pay PMI unless you put 20% down. But the good news is you won't be paying for the life of your loan, like with FHA. You have the option to pre-pay, let the lender pay in exchange for a higher rate, or pay monthly and cancel when your LTV meets the requirement. If looking at this option, ask them to run it each way so you can see what's best for you. We ended up going with the lender-paid option and then buying the rate back down with points. This resulted in the least amount out of pocket, lower payments, and a nice tax deduction.

 

I believe the waiting period is still 4 years. FHA is less and has some exceptions that make it as little as 12 months now.

Thanks for that info!