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The Business of Real Estate

Good info about FHA loans

I received this link today via email from Lowe’s:

For Your Clients: 7 Things All Borrowers Should Know About FHA Loans

This is good summary information about what has become a very important mortgage loan product.  A few years ago there were so many “creative” ways to get zero or low down payment conventional loans, and private mortage insurance was so inexpensive,  that FHA loans were used less frequently.  That is no longer the case.

I do have a few comments about points in that flyer:

  • Item #3 says that FHA loans can go as high as “almost $800,000,” and that the maximum loan amount varies county by county.  In Austin and Central Texas, the maximum is $288,750 for a single family home.  With the required 3.5% down payment, that means that an FHA borrower could purchase a home here at a contract price up to $299,222, with $10,472 down.
  • Item #7 indicates that FHA loans are assumable.  In most cases, I will recommend against selling your property via assumption of your mortgage loan obligation.  Moreover, note that this is a “qualifying assumption,” meaning that the borrower must qualify for this loan based on his or her own income and credit standing.  If the market interest rate is much higher at the time of resale than the rate on the existing FHA loan then assumption may be attractive to the buyer, but I strongly recommend that sellers should require a new loan, not an assumption.

Here is a brochure from FHA and the National Association of Realtors® that I think will also be helpful:

FHA Improvements Benefit You

For most home buyers, there are really only two realistic mortgage alternatives:  Conventional and FHA.  (VA and USDA are specialized products for unique buyers or properties.)  When the buyer and a property meet FHA loan requirements, that is almost always the preferred option.  Call or email me if you have any questions or just want to talk about the process.

About Bill Morris, Realtor

More than thirty years of business experience (high tech, client service, business organization and start-up, including many years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs: -- Seller Representation is a comprehensive process that begins with thorough market analysis and consultation, continues with properly staging the home to achieve the highest price possible in a reasonable time on market, a complete program of marketing and promotion, ongoing updates and communication, closing coordination, and follow-up throughout (and after) the sale. -- Buyer Representation is also full service: shopping, previewing, price and market consultation, contracting, negotiating, coordination of inspections, appraisals, repairs, and closing details, and follow-up beyond the closing of your purchase to ensure your lasting satisfaction. Because the real estate industry is becoming more sophisticated and challenging every day, you need a professional that understands the industry and is positioned to stay ahead of the game. I go the extra mile to help you achieve your goals. That's why I constantly research the market and property values so your home is priced effectively from day one. I also make sure the public knows your home is for sale by using innovative advertising and marketing techniques to attract potential buyers.


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