Since the real estate market has gone down over the last few years in San Diego, I am seeing a huge increase in FHA & VA financing. Last week I discussed VA Financing in detail, so this article discusses 5 advantages of FHA Financing.
The Federal Housing Administration (FHA) has helped over 35 million people secure the dream of homeownership since 1934. Backed by the federal government, FHA provides safe mortgage insurance solutions.
What has kept FHA from being used in San Diego until recently have been real estate prices – now many homes in the County are within FHA limits which will be increased again with the Stimulus Package that will be signed tomorrow. I will update you soon with the new loan limits.
So here are 5 advantages of using an FHA loan to purchase a home:
- Low 3.5% down payment
- No prepayment penalties
- Non-occupant or co-borrower is permitted
- Expanded qualifying ratios
- Purchase/Rehabilitation Loan 203K*
Please visit New Homebuyers Article on FHA website for more information on FHA financing.
*Another type of FHA loan actually lets you borrow the money to purchase the home and also money to fix up the home. It is know as a FHA 203K and is an excellent loan to use when purchasing real fixer uppers – like Bank Owned sales.
Sometimes you see a home you’d like to buy, but it needs a lot of work. FHA has a loan product for rehabilitating and repairing single-family properties called the SF Rehabilitation Loan program (203k). You can get just one mortgage loan which includes the mortgage and the cost of repairs combined. The mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. The advantage of this loan is that you can buy a home that needs a lot of work, but you still have only one mortgage payment, and you can complete the repairs after buying the home.
Check out this video by Mark Robertson on FHA advantages and disadvantages.
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