Home Buyers on the Move

With the passage of the economic stimulus package, many home buyers are taking advantage of the opportunity to get an FHA (Federal Home Administration) loan.

FHA loans had lost their popularity especially in our high-cost areas of California in the 1990s, as home values began inching upward, surpassing FHA mortgage limits.

Also, many felt FHA had very strict credit standards and too many stringent and burdensome appraisal requirements, and often it took too long to close an FHA loan.

Now that conforming loan limits have been increased to $729,750 in LA County, FHA loans have become a very feasible option for homebuyers, especially those couples and individuals buying their first home.

Raising the loan limits also allows a larger pool of borrowers to qualify for lower-cost mortgages or to refinance existing mortgages. FHA loans have some advantages over other loan products. FHA insures the loan, so the lender can offer a borrower a better deal. FHA requires low down payments, low closing costs and easy credit qualifying.

Here are a list of benefits to an FHA loan: 

• All FHA loans are fully assumable. 

• Credit standards are more flexible. You may qualify for an FHA loan even if you have encountered financial problems. Nominal credit scores apply, and non-traditional proof of credit worthiness may be used, i.e., proof of rent/utility payments. If you have filed for bankruptcy in the past, you can obtain an FHA loan two years from the date of your bankruptcy discharge, as long as you've maintained good credit since your debts were discharged.   

• FHA's debt to income ratio is 31/43 with a 3 percent down payment requirement; 100 percent of the down payment may be gift money. 

• Co-signers/co-mortgagors need not be occupants of the home. 

• FHA appraisal requirements have been greatly relaxed. 

• Underwriting is now standardized. 

• FHA no longer requires seller closing fees, just a tax service fee. 

• It takes about 30 to 60 days to close, but there are exceptions, as long as full docs are received. 

• FHA repair demands are more reasonable today. For example, defective roofs that leak still need to be replaced, but an older roof does not necessitate replacement if it doesn't leak.

Since home prices have become more realistic and people learn of the advantages of FHA loans they are becoming increasingly more popular.

We always encourage buyers to learn more about FHA loans and to use a knowledgeable, trustworthy lender who understands how FHA loans work. 

The FHA stimulus package is a window of opportunity for buyers, and while there is a move to make the conforming loan limits increases permanent, the bill as signed by the president states the loan limits will be in effect only this year. 

For more information about getting qualified for a home loan call (310) 745-1600 or visit this link: Best Mortgage Rates

Comments

[Justin]

Great information. Here is a great Manhattan Beach home for sale deal just hit the market in the supreme tree section 637 29th street deal for $1,399,999 well below market for a nice home 3,354 sqft. justin@mbainrealty.com