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Advantages of an FHA loan

February 12th, 2009
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Have you heard about the new FHA loan programs?

The FHA loan has quickly become the “loan of choice” for many buyers in today’s crazy market. The FHA loan pretty much disappeared in California about 15 years ago because the FHA loan limits had not kept up with the price of homes.

Well  MUCH  has changed recently. As the newspapers are quick to point-out, the price of homes have dropped significantly in the last three years, and this combined with higher loan limits for an FHA loan make this a very useful loan today. Today’s loan limits for an FHA loan are $520,950, AND the Obama administration may change this to even higher limits later this month. This means that even with a minimal 3.5% down payment, today you could have a purchase price of $539,844. That will buy plenty of home in today’s Sonoma County real estate market.

Here are some other benefits available from an FHA loan;

FHA loans are assumable!!! This means that when you go to sell your home, you can offer a qualifying Buyer the same great interest rate that you got, regardless of what the current interest rates are the day you sell your home. Today’s incredible low rates will probably not be around in a few years, so YOUR home will be very attractive to potential buyers.

 The Buyer’s FICO scores can be lower for an FHA loan than those for a conventional loan. This means more buyers will qualify.

The allowable debt ratios are higher for an FHA loan than the debt-ratio limits imposed for conventional loans.

The FHA loan requires a smaller down payment: FHA-insured loans have a low 3.5% down payment and the money can come from a family member, employer or charitable organization as a gift. Most conventional loan programs don’t allow this.

FHA has eliminated unnecessary requirements to make minor repairs on homes and the current requirements are quite easy to follow.

 The seller can contribute up to six percent of the home’s price toward the Buyer’s closing costs.

 Mortgage insurance is funded into the loan, meaning a premium of 1.5% is added to the loan balance instead of being paid out-of-pocket. In addition, a small portion for the mortgage insurance premium is added to the monthly payment, but it is far less than private mortgage insurance monthly premiums.

I hope this helps with your questions about the FHA loan. I do know several lenders that are quite good with FHA loans and offer very competitive rates. Call me at 707-327-9407 or email me at davidharts@sbcglobal.net if you want to learn more about the incredible opportunities in today’s market.

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