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Posted on September 10, 2008 by Mario Olivera | Posted under Mortgage Refinance
Things to Know when choosing an FHA loan
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- You may be eligible to get a cash-out loan for 95% of your home's value - If your home is categorized to be in a high cost area and your loan amount fits into a certain bracket, it could be lowered to 85% - You are eligible to refinance your existing 1st and 2nd loans, as long as you've had them for 12 months, into a single rate & term loan for 97% of the value of your home. - Since FHA has no CLTV maximums, you could possibly refinance your 1st mortgage and keep your existing 2nd mortgage in place if the 2nd lien holder will honor your request. - You could buy a home with just 3% down financing (increases to 3.5% on October 1st) - The 3% down can be as a gift on your home purchase. - You could still obtain financing for a refinance or purchase even with blemishes on your credit or with low credit scores. According to industry experts, the lowest score one can have is around 580. - You don't have to payoff collections and old delinquent cards to secure mortgage financing. - Your Loan Program choices are the following: o 1,3,5, or 7 year adjustable rate mortgages o 30 year fixed rate o 15 year fixed rate - FHA Mortgage loans are for First Time Homebuyers, Owner Occupant Homeowners and in some cases move-up buyers. - Multiple borrowers, who can be unrelated, can apply together to qualify for financing Mortgage Insurance on FHA Loans: When you have a FHA loan, it doesn't matter if you have 50% equity in your home or you are purchasing a new home with 3% down you will need to have mortgage insurance which is different than typical conventional loans. This is one of the major points that FHA is able to offer the loans is does to the public. It is due to it simply being an insurance program. In reality, the loan is insured two times: once at the closing of the loan and again annually, paid monthly, until the end of the loan term. 1st: FHA's Up Front Mortgage Insurance Premium (UFMIP) is 1.5% of the loan (Starting October 1st, 2008 - currently, the premium is different based on FICO & LTV). 2nd: the Yearly Mortgage Insurance or Monthly Mortgage Insurance (MMI) of .50% of the loan balance over a 12 month period is present for almost the full the loan term. Some methods to remove the Monthly Mortgage insurance from your FHA loan are: 1. you have paid your MMI for 60 months from the date of closing 2. you have paid the original loan you down to 78% of what was originally borrowed. If you choose a 15 year fixed rate FHA loan then your MMI would be lowered to .25% of your loan amount over a 1 year period. When deciding your options for the upfront mortgage insurance you have the choice to finance this fee. The upfront mortgage insurance fee can then be added to your loan balance, thereby giving you a higher loan amount on a 30 year or 15 year fixed term. Borrowers also can pay this fee at closing out of your proceeds or as a closing cost. Some borrowers who have really negotiated can also have it paid for with credits from their signed purchase contract. Just as with any time, you are dealing with large sums of money, it is important to do your homework and only work with mortgage brokers who are forthcoming about the process, their costs, and do what's best for your needs. Brokers that are state licensed and have active national memberships with mortgage brokers associations should be given favorable consideration as they generally uphold the ethics and best practices within the industry for home loan origination About The Author: Mario Olivera is an investor and contributor with Home Loan Shoppers and Commercial Property Financing |
Tags: MORTGAGE, JUMBO MORTGAGE, FHA MORTGAGE LOAN, SECOND MORTGAGE, HOME EQUITY LINE, REFINANCING, REFINANCE
