Tagged: Benefits Of FHA Loans

FHA Home Loan Program Overview for Marlboro, NJ Buyers

FHA Home Loan Program Overview for Marlboro, NJ Buyers

FHA Home Loan Program Overview for Marlboro, NJ Buyers…  FHA is a home loan program where private mortgage insurance is provided by the Federal government. Most major mortgage companies offer it. Although the program is often used by first time home buyers, it is not restricted to them. This blog provides FHA Home Loan Program Overview for Marlboro, NJ Buyers and pre-approval guidance to help you decide whether it is a home loan program that you should consider.

Benefits Of FHA Loans

There are a few important benefits of FHA loans. The lowest down payment for FHA mortgages is 3%, which satisfies home buyers who do not have a 20% down payment. They also allow home buyers to receive funds for down payment and closing costs as a gift from a family member. Another benefit is the streamlined refinancing option. It allows a refinance to a lower rate without needing a new appraisal, which is useful if mortgage rates and home values both drop. The mortgages are also assumable, meaning that a buyer may take over the loan at the existing interest rate. This can help when interest rates rise. Lastly, FHA does not penalize buyers for credit rankings. Although buyers must still maintain satisfactory credit, below average scores will not lead to higher interest rates.

Downsides Of FHA Financing

There are downsides of FHA financing to keep in mind. The mortgage insurance (MI) is typically more than a conventional loan. There is an up-front large fee and a recurring fee due with each payment until the balance is paid down below 80% of the purchase price (or updated appraised value). For condominium units, the condo complex must meet certain requirements such as minimum reserves and minimum owner occupancy rates. Converted multi-family buildings and duplexes are therefore difficult to get approved. Single family homes must also meet certain criteria geared towards safety concerns.

FHA Pre-approval Guidance

Prior to applying for a pre-approval, pull your credit report and address any mistakes. Also obtain important financial paperwork such as bank statements, tax returns from past years, recent pay stubs, and investment account statements. Underwriters will typically ask for these items. Ask a loan officer to obtain potential monthly payments (based on a particular home price and your financial qualifications) and closing costs before getting too far in the process.

FHA Home Loan Program Overview for Marlboro, NJ Buyers

FHA makes purchasing a home easier for some home buyers who may otherwise not be able to get a loan. It may also make refinancing or selling a property easier in the future. However, it does have higher fees and property-specific requirements, so not everyone is able to or may want to use an FHA home loan program. Speak with an FHA loan professional to better evaluate this option. Contact me at  732-319-1340 or by email at sbhaskara@optonline.net if you would like more information. I would be happy to help! To begin your home search in Marlboro, NJ, please visit Best in NJ Real Estate – Marlboro, NJ Homes for Sale.