West Newbury MA FHA Financing Program Guidance

FHA is a financing 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 limited to them. This blog provides West Newbury MA FHA Financing Program Guidance and pre-approval advice to help you determine whether it is a financing program that you should consider.

Positive Features Of FHA Financing

There are a few important positive features of FHA financing. The lowest down payment for FHA mortgages is 3%, which accommodates home buyers who do not have a large down payment. They also allow home buyers to receive funds for down payment and closing costs as a gift from a family member. An additional advantage is the streamlined refinancing alternative. It allows a refinance to a lower payment without needing a updated appraisal, which is useful during declining markets. The loans are also assumable, meaning that it can be transferred to a new owner. This can help if interest rates rise. Lastly, FHA does not penalize buyers for credit rankings. Although buyers must still have satisfactory credit, less than average scores will not result in higher interest rates.

Downsides Of FHA Financing

There are downsides of FHA financing to consider. The mortgage insurance (MI) is typically higher than a conventional loan. There is a one-time lump sum fee and a repeating fee due with each payment until the loan is paid down below 80% of the purchase price (or updated appraised value). For condominium units, the condo building must meet certain requirements such as minimum reserves and sufficient owner occupancy rates. Converted multi-family buildings and duplexes are therefore unlikely to get approved. Single family properties must also meet certain criteria geared towards safety concerns.

FHA Pre-approval Advice

Before applying for a pre-approval, pull your credit report and fix any mistakes. Also track important financial documentation such as bank statements, tax returns from recent years, recent pay stubs, and investment account statements. Mortgage Professionals will normally ask for a copy of these documents. Ask a loan officer to obtain potential monthly payments (based on a particular purchase price and your credit qualifications) and closing fees before proceeding too far in the process.

West Newbury MA FHA Financing Program Guidance

FHA makes a home purchase achievable for some buyers who may otherwise not qualify for a mortgage. 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 can or will want to use an FHA financing program. Speak with an FHA mortgage professional to fully evaluate this option.

About Editor-John P. Wells

I am a resident of Newburyport and have worked in education, high tech and urban development. My interests in architecture and construction are invaluable to my clients. For more information please visit the Wellsco website.