FHA is Better than it Used To Be

I've closed FHA loans for nearly 20 years, and I have to say, FHA is much easier than it used to be. For those loan officers who have been in the business for 7 years or less and are not used to "Full Income" documentation, that may be hard to believe, but its true.

FHA used to be quirky. There were certain loan fees which the buyer was not allowed to pay, which meant the seller was required to pay fees on the buyers behalf. However, effective with Mortgagee Letter 2006-04 which was released 1/27/06, the seller is no longer required to pay any of the buyer fees. Not everyone seems to realize this as I've had Realtors and Escrow companies try to tell me otherwise until I've provided a copy of the Mortgagee Letter. The seller is still allowed to pay up to 6% of the closing costs, but is not required to.  A big advantage for FHA over a typical Conventional loan is that the seller can actually pay "prepaid" expenses such as interest, taxes, and insurance.

FHA Appraisals are much Easier than Before

FHA appraisals used to be difficult as well. Flat roofs, well and septic inspections caused delays. And of course, the required Termite Inspection and clearance was a major drawback. But now, effective with Mortgagee Letter 2005-48 released 1/1/2006, the FHA appraisal rules were improved. No more termite, well, or septic inspections, unless there appears to be obvious damage.

Cosmetic repairs are not required anymore as well. For example, minor leaks, cracked windows, old carpeting, bare floors, and more are not required to be fixed.

For a First Time Home Buyer with Less than a 10% Down Payment, a FHA loan is the Best Way to Go!

Probably the biggest reason why FHA is the best way to buy a home in Orange County is because of the small down payment required. FHA only requires 3% down. On a $350,000 home, that is only $10,500. A Conventional loan currently requires 10% down, which would be $35,000. This is a huge difference. Also, as mentioned previously, the seller can pay "prepaid" expenses for the buyer, whereas on a Conventional loan, the buyer has to pay the "prepaid" expenses.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by California Dept. of Real Estate.  Lic. # 01190897