Tired of waiting for an approval, closing or funding? Purchase contracts falling through?
If you’ve been watching the news the Federal Reserve did another emergency rate cut down to zero and promised unlimited purchasing of bonds and Mortgage Backed Securities.
Partly because they were horrified with the bond market and mortgage rate reaction.
As a nimble direct mortgage lender, MBANC provides concierge service across specialized products for today's market. As most people are facing long lines at other lenders and becoming just a number in a line, were closing funding scenarios.
What Is An FHA Loan?
FHA loans are backed by the Federal Housing Administration, an agency under the jurisdiction of the Department of Housing and Urban Development. FHA loans are insured by the FHA, which simply means that organization protects your lender against loss if you default on your loan.
FHA loans are available with low down payment options and lower minimum credit score limits, but you’ll also have to pay mortgage insurance.
The option of a low down payment and more lenient credit requirements can make FHA loans particularly attractive for first-time home buyers, although you don’t have to be a first-time home buyer in order to qualify. Here are some benefits of FHA loans:
- ► Credit score requirements are lower compared to other loans.
- ► Your lender can accept a lower down payment.
- ► You could still qualify for an FHA loan if you have a bankruptcy or other financial issues in your history.
- ► Closing costs can often be rolled into your loan.
FHA Loan Requirements
There are certain requirements you have to meet to qualify for an FHA loan, including:
- ► The home you consider must be appraised by an FHA-approved appraiser.
- ► You can only get a new FHA loan if the home you consider will be your primary residence, which means that it can’t be an investment property or second home.
- ► You must occupy the property within 60 days of closing.
- ► An inspection must occur, and the inspection must report whether the property meets minimum property standards.
There are a few more specific conditions to qualify, including a down payment amount, mortgage insurance, credit score, loan limits and income requirements. We’ll explore these factors in more depth below.
FHA Mortgage Insurance
You have to pay a mortgage insurance premium for an FHA loan. Mortgage insurance is put into place to insure your lender against losses if you default on your loan.
In most cases, you pay mortgage insurance for the life of an FHA loan (unless you made a down payment of at least 10%, in which case, MIP would be on the loan for 11 years). FHA loan mortgage insurance is assessed a couple of different ways. First, an upfront mortgage premium is charged, which normally amounts to 1.75% of your base loan amount.
You also pay an annual mortgage insurance premium which is based on the term (length) of your mortgage, your loan-to-value ratio, your total mortgage amount and the size of your down payment. Annual MIP payments run approximately 0.45% – 1.05% of the base loan amount.