What's the story with an FHA loan?
I just heard about FHA loans, which seem to provide loans to people in urban or rural areas (as well as those with previously weak credit) with only 3% down. What’s the catch? Higher interest? It seems too good to be true, so I’m betting that it is.
I just heard about FHA loans, which seem to provide loans to people in urban or rural areas (as well as those with previously weak credit) with only 3% down. What’s the catch? Higher interest? It seems too good to be true, so I’m betting that it is.
Hi
This is nancy123
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nancy123
Home Loans
I heard that you cant sell or refinance, in ten years, that if you do, the government keeps a percentage of the equity you get from the house…
I’m interested in this thread since my mortgage broker says we would be great for an FHA loan (high incomes but don’t have much $$$ to put down). However, it seems like everywhere you look in NYC they want at least 10% down. Anyone know how to work around that?
The FHA limit in the five boroughs of New York City is $362,790 for a single family home / co-op / condo.
Check out the mortgage thread on creditboards.com for all the info you could ever need on FHA loans and the various ways to make them work.
This is the type of mortgage that allowed me to buy my first two-family brownstone when I was in my mid 20’s when interest rates were up in the double digits. If I waited until I saved a downpayment of 20%, or even 10%, it just never would have happened. I’ve been fortunate enough to go on to buy several more properties with creative thinking and planning and long ago refinanced for 4.6%.
My bet is FHA is a better rate in todays environment than you can get from most lenders unless you have stellar credit.
Go get some quotes. A lot of lenders have just raised their fees (and therefore rates) because fannie mae has pushed its rates up significantly for anything less than perfection, and most lenders push their loans back to fannie mae. A lot of other lenders have simply exited the market.
I bet FHA is much more competitive than before.
I doubt you can combine FHA with another loan though, to get a better blended rate, but who knows? Call them and see. Or call a mortgage broker trained to do FHA and discuss.
I mentioned sub-prime in the sense that the FHA should not be equated with the murky world of sub-prime even though a lot of their customers are sub-prime in terms of FICO. I believe they take pains to make sure you’re not going into something above your capacity to repay. So it isn’t a ticket to a house you can’t really afford.
Right now it seems that the spread from perfect credit to no credit spans a much wider range of rates than it did during the bubble. So if you’ve not perfect credit and 20%+ down, then you will have difficulty finding rates in the 6s even though that is the headline rate. The advantage now of FHA is that they do not charge a much higher rate if you can show that you can afford to pay the loan but your FICO is low and your downpayment is small. So I think the rate advantage of FHA is much higher than it was during the easy money years.
It might be a lot of paperwork, but if it were east the FHA program would be struck with the same kind of bad debts that countrywide has.
A little confused here. Are these loans offering better rates or worse rates than bank loans? If better, does it make sense for those with better credit to get one of these for the max allowable and then a regular bank loan for the rest needed? Can you do that? If worse (which I think 11:29) implies, then what’s too good to be true about them? Is it just that it seems to good that someone with bad credit can qualify for a loan that costs them a little more?