FHA loans are huge in the Ann Arbor market area. This is a great post to dispel many of the myths.
If you are meeting with a local (hope it is local) lender make sure you know what the facts are.
Jeff is a huge FHA lender that I follow because he writes FHA loans each and every day.His contact information is below.
Thinking a buying a house in the Ann Arbor Area?
Check out this site with Google Maps, Satellite Images and multiple photos.
FHA loans are not dead and shouldn't be going any where soon.
The other day a loan officer sent me an e-mail asking me if FHA loans are going away anytime soon. I asked, where did you hear this nonsense. The loan officer replied, “from 3 realtors in my area.” Sounds like water cooler talk to me.
My Common sense – If FHA loans disappear, so will our economy, right off the map. Here is why..
Positives with FHA loans -
FHA still allows you to put 3.5 percent down as your down payment, even with a credit score of 620. Yes, there are VA loans and USDA loans, which are very good loans, but they have restrictions for many borrowers.
In regards to conventional loans, it would be very difficult to find a lender to do them below a 680 credit score with 5 percent down, because of the MI (mortgage insurance) company restrictions. So your most likely scenario is that you would need a 680 or above just to put 5 percent down, and still with large pricing adjustments.
You can even have a non-occupant co-borrower co-sign for your FHA loan. The guidelines are much easier than those of a conventional loan.
FHA Rumors and FHA Myths -
FHA loans are more expensive than conventional loans.
To many rumors stating that FHA loans are more expensive than conventional loans. The main reason why someone would say this is because of FHA’s upfront mortgage insurance. The upfront is only 1 percent of the base loan amount. Besides, if you have credit scores below 680 and putting down even 19 percent, you will be paying any where from 1.75 points to 2.25 points for that loan, besides the normal fees. And this will be out of pocket, to where the upfront mortgage insurance is rolled into the loan. The general fees and rates should be almost the same with any lender out there. For a better glimpse to why FHA loans might be cheaper, even with 10% down, please read this post. FHA loan vs Conventional loan with a 659 credit score
6 percent seller concession has been reduced to 3 percent -
(thanks to Joe Pryor - comment # 9) - No, you can still get 6% seller help. It has been commented on the Federal Regsiter, but it's still in it's talking stages.
FHA Origination Fees -
All FHA loans have origination fees. False. Another rumor is that FHA gets part of the origination fee. False. I actually had a borrower that was told this once by another loan officer.
FHA appraisals are more harsh than conventional appraisals -
Why would anyone want to purchase a home that might need major repairs. Maybe the house is really beat up, then this could be true. Hence why you could do a FHA 203-k loan, which would allow you to add the cost of all repairs into the mortgage. Secondly, FHA did away with the VC sheet prior to 2003, so we are just talking about specifics in most cases.
FHA Loans take forever -
Sometimes taking up to 2 to 3 months. Well, many loans are taking a little longer now because of all the checks and balances when it comes to the mortgage process. But if you are speaking to a very good loan officer and if they do their job properly upfront, then things should get done in a reasonable time. What is a reasonable time frame? 30 days from start to finish for a loan to close.
Remember : A FHA loan is not just for first time home buyers.
Summary : Just be careful of such rumors. Check the facts, because some people are just true sales people and don’t know any better. It just comes down to speaking with a very qualified loan officer who will ask the borrower about their goals, to figure out what loan best fits that borrower, not what’s easy for the loan officer. And seriously, people need to stop listening to their friends, neighbors, family members, and some realtors that just don’t know any better.
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For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc
Missy Caulk & Team can be reached at 734-926-9797 or email: Missy@MissyCaulk.com
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Three Realtos suggested that FHA loans are going away????
HA! Probably rumors started by Realtors with a broker that has acquired an interest in a mortgage company and they are not FHA APPROVED.
GOOD MORNING MISSY! So great to have this information shared! Especially the rumor about FHA only being for first time home buyers. BTW - Ann Arbor was featured on Man vs Food last night - I thought of you as I watched a few minutes of it! -- Gab
Wow, they must be in Beverly Hills. FHA is our lifeline in Lubbock, TX. over 80% of sales are FHA........if they close up so would we! Easy as conventional and less money for the buyer, also assumable for future buyers. It's a great product! Thanks for your post Missy
Missy.. thanks for reblogging this and for the kind compliment....
Good information Missy!
FHA loans are great. Don't let them scare you away.
Better for the client in my opinion.
Good luck & success to you Missy!
Great info. If it weren't for FHA, we WOULD be at a stand still in this country.
Missy, missed this the first time around, so thanks for reblogging. FHA loans are the only way many buyers can swing their purcahse.
I didn't see this when it was first POSTED .. Thanks for sharing it Missy. I'm glad, I could point my buyers to this if they ever doubt me.... also Thank you JEFF.
I didn't see this when it was first POSTED .. Thanks for sharing it Missy. I'm glad, I could point my buyers to this if they ever doubt me.... also Thank you JEFF.
Missy, great re-blog from one of the best sources of FHA information on the net.