Mortgage rates are at a historic low, but as we predicted they are starting to inch up. The real QUESTION is,...”Do you want to save money?”. Do you want to lock in a fixed FHA Loan with a rate around 5% and have the best possible mortgage rate in this “scary” economy?
FHA Home Mortgage Loan Frequently Asked Questions
What is the FHA?
The Federal Housing Administration (FHA) was created during the Great Depression as a spur to the housing market, which had been devastated. It has continued to exist as an aid for people who do not meet traditional financing requirements, like having a credit history or proof of income.
Do I qualify for an FHA home mortgage loan?
If you have a good track record of paying your bills on time and you do not already have a FHA loan, there’s a good chance you qualify. For more details about FHA qualifications click here.
Do I need a lot of available cash to buy a home with an FHA loan?
No. The downpayment is only 3% and many of the closing costs and fees associated with an FHA home mortgage loan can be included in the amount of the loan, so you need very little cash up front. Call Homestar Financial to find out what your specific situation requires.
Can my downpayment come from gifts?
Yes! You can pay 100% of your downpayment with gifts from friends, relatives, or organizations.
What is a debt-to-income ratio and how does it apply to FHA loans?
Your debt-to-income ratio tells the lender how much you can afford to borrow. It is expressed as 2 numbers with a forward slash (/) between them. The first number is the percentage of your monthly income that will go towards your mortgage payment. The second number is the percentage of your monthly income that will go towards all of your debts combined (including your mortgage payment). Most lenders require a debt-to-income ratio of 28/36. The FHA program allows people to borrow with debt-to-income ratios of 29/41, and in some cases even higher.
Does the FHA issue the loan?
No. The FHA insures loans made by others. Basically, the FHA charges insurance on loans made using the program, and if a borrower defaults on a loan the FHA uses the money from these insurance premiums to compensate the lender. This is how the FHA can convince lenders to give loans to otherwise higher-risk borrowers.
Is getting an FHA loan difficult?
For the most part, it’s not much more difficult than getting a conventional mortgage. Contact Homestar Financial, and we’ll explain the process to you and help you get started.
What types of property can I buy with an FHA loan?
The FHA has a set of qualifications that the property you want to purchase must meet:
You must intend to live in the property.
- Commercial properties and cooperatives are not eligible for an FHA loan.
- Single family homes, small rental properties (up to 4 units), manufactured homes, modular homes, and condos may qualify.
- The property does not qualify if the seller has acquired the property within the last 90 days.
- If the home is more than 1 year old and you would like to make improvements up to $5,000, then you may qualify for a 203(k) loan. This type of FHA home mortgage loan is used to purchase and remodel a home.
What types of home mortgage loans are available through the FHA program?
You can get a Fixed Rate Mortgage, an Adjustable Rate Mortgage, a Hybrid Mortgage, a Jumbo Fixed Rate Mortgage, a Balloon Mortgage, a Bridge Loan, or a Reverse Mortgage. For more information about these types of mortgages click here. [mortgage type page]
I want to refinance. Can the FHA help?
Yes! The FHA offers a streamline refinance program for those who already have an FHA home mortgage loan and want to refinance for lower monthly payments. In some cases you can do this with no up front costs. You may also get a cash-out mortgage refinance whether or not the mortgage you are refinancing is an FHA loan. With a cash-out refinance, you can get up to 85% of the value of the home. Call Homestar Financial to see if either of these options are right for you.
What are the FHA mortgage loan limits in my area?
To find out what the limit for an FHA home mortgage loan is in your area, you will need to visit the HUD web site at https://entp.hud.gov/idapp/html/hicostlook.cfm Choose your State, County and “FHA Forward” from the drop downs and click the send button.
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