FHA loans can facilitate home ownership with 3.5% down payments and refinances up to 85% to value with cash out! By Bill Emhoff of Primary Residential Mortgage, Inc.
The Federal Housing Administration (FHA) program first began in 1934 in an effort to encourage home ownership despite the difficult economic times of the era. The program enables consumers who may not qualify for a standard loan to obtain the financing they need to purchase or refinance a home without income limitations.
FHA loans differ from typical loans in that they are insured by the Federal Housing Administration, which is a part of the Department of Housing and Urban Development (HUD). Because this insurance reduces the lender’s risk on the loan, lenders have greater flexibility with regard to approving loans. For example, FHA loans are not credit-score driven, so a client may be able to obtain a loan despite having had credit problems or even a bankruptcy in the past. Alternatively, if a consumer does not have a traditional credit history; it is still possible to obtain financing by documenting payment histories on items such as rent and utilities.
If you want refinance from $417,000 up to $729,750 to take cash-out for a remodel, college tuition or debt consolidation or if you already have an equity line of credit you want to roll into your refinance, conventional guidelines will only allow you to borrow a maximum of 60% of your properties value. With FHA, we can currently lend up to 85% of the appraised value and still get great rates!
FHA loans also provide added flexibility when it comes to closing costs and the down payment. Many of the closing costs can be incorporated into the loan, and a down payment of less than 3.5% of the purchase price is required. The down payment may be obtained as a gift from a family member or through a down-payment assistance program. FHA loans are processed just like any other loan, and they provide a wonderful opportunity for consumers who are seeking to achieve home ownership!
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