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.