Articles in Category: Adjustable Rate Mortgage

July 8, 2016

FHA Loans Versus Conventional Loans

Here’s the Scoop on Conventional Loans from FHA.com on Vimeo. What are the differences between FHA home loans and conventional loans? There are several, some features of mortgage loans can vary depending on the lender, and state law may also affect how your home loan is handled depending on circumstances, but there are a few very important general differences to keep in mind when comparing FHA loans to conventional loans. The first difference is the basic nature of the loan itself. Conventional loans are not backed by the government, unlike FHA home loans where the FHA guarantees a portion of the loan to make it more attractive to the lender to issue credit. In the event that a borrower defaults on an FHA loan, the lender and the FHA have | more...

July 7, 2016

FHA Loan Terms

By Joe Wallace

Understanding Your Loan Term from FHA.com on Vimeo. How long is an FHA mortgage? The answer to that question depends on a variety of factors including the initial choice of fixed or adjustable rate mortgage, whether you plan to pay off the loan early or not, whether you plan to refinance, etc. The typical length of a fixed rate, new purchase FHA mortgage can be 15 or 30 years. If you are refinancing, other variables may apply. Choosing a loan term depends on the individual borrower’s specific needs and goals. You may wish to apply for a 15-year mortgage if you are interested in saving money over the lifetime of the loan; borrowers who choose 15-year mortgages will make higher monthly payments than those who choose 30-year loans, but the | more...

July 5, 2016

FHA Loans For Military Members

By Joe Wallace

There are a variety of reasons why a military member would consider buying a home with an FHA mortgage, including the desire to own a home instead of renting in a crowded military rental market. While it’s true that VA home loans are available for military members as part of their benefits, some may choose the FHA option instead. What should a military member know about FHA mortgages and refinance loans? The first thing some borrowers need to know is that, yes, it is possible to refinance a VA mortgage into an FHA mortgage loan. FHA refinance loans permit the refinancing of non-FHA mortgages for cash-out refinancing and “non-streamline” refinance options. You do not have to use your existing lender to refinance into an FHA mortgage, instead a borrower is | more...

Can I buy a manufactured home with an FHA loan?

June 22, 2016

Are You Ready For An FHA Mortgage?

By Joe Wallace

A recent CNN Money article reveals that more than 10 million Americans spend half their income on rent. It’s a figure (based on a 2014 study at Harvard) that is surprising to some, and motivating for others. Are you considering an FHA mortgage as an alternative to high rents? FHA home loans have features that can be very helpful to those in the market for a new home. Consider the down payment requirement for an FHA mortgage compared to many conventional loans and it’s easy to see that the FHA’s 3.5% down payment requirement compared to between 10% and 20% down for conventional mortgages depending on the lender and the borrower’s financial qualifications. The lower down payment is one factor; another is the borrower’s ability to refinance an FHA mortgage | more...

June 21, 2016

More On FHA Adjustable Rate Mortgages

By Joe Wallace

In a previous blog post we discussed FHA adjustable rate mortgage loans and looked at some aspects of how these loans work. FHA adjustable rate mortgages, also known as ARM loans or FHA ARM loans, feature an introductory rate that the borrower and lender will negotiate. This rate will expire at some point and the new rate will be calculated. The interest rate adjustments over the lifetime of the loan are regulated by an FHA requirement that includes a cap on the amount and severity of the rate changes. As we discussed in the last blog post, there are four components to an ARM loan you should know, which include the following: 1. index 2. margin 3. interest rate cap structure 4. initial interest rate period (also known as a | more...

June 20, 2016

What Is An FHA Adjustable Rate Mortgage?

By Joe Wallace

The government’s consumer protection agency, The Consumer Financial Protection Bureau (CFPB), has a page on its official site explaining the differences between a fixed rate mortgage loan and an adjustable rate mortgages, sometimes known as ARM loans. According to the CFPB, “The difference between a fixed rate and an adjustable rate mortgage, is that for fixed rates the interest rate is set when you take out the loan and will not change. With an adjustable rate mortgage, the interest rate may go up or down. With a fixed rate mortgage, the interest rate is set when you take out the loan and will not change”. Does the FHA single-family home loan program offer such a loan? Can borrowers apply for an FHA ARM loan with a participating lender? Yes. Any | more...

June 13, 2016

For Consumers In Need Of Help Preparing For An FHA Mortgage

By Joe Wallace

Many borrowers feel intimidated by the home buying process. Are you unsure about credit score issues, pre-purchase budget issues, down payment requirements, or appraisal rules? It’s easy to understand why; buying a home is a major investment and it’s definitely a step worth taking the time to research and save up for properly. Why does it take a year or better to get prepared for the home loan application? What are the basic credit score requirements for an FHA mortgage? Can I refinance my home at some point with a cash-out loan? These are all important questions. There are other commonly asked questions, too. Many involve dollar amounts for down payments, appraisal fees, or other loan expenses. We get asked these questions frequently in the comments section, but unfortunately there’s | more...

June 8, 2016

FHA Home Loan Interest Rate Questions And Answers

By Joe Wallace

There are many questions about FHA home loans, especially where interest rates are concerned. Do you know how the FHA loan process works when it comes to negotiating rates or choosing a fixed rate or an adjustable rate mortgage loan? Here are some of the most common questions and answers in this area: How does the FHA set interest rates on FHA mortgage loans and refinance loans? In general, the FHA actually does not set or regulate interest rates on FHA home loans. For certain loan products there are restrictions on how interest rates can be changed or modified, and there are rules governing the purchase of discount points in order to lower mortgage loan interest rates. But the rates for an FHA mortgage are negotiated between the lender and | more...

June 3, 2016

FHA Loan Questions and Answers

By Joe Wallace

Tired of renting and looking to purchase a home of your own? There are many questions many first time home buyers or first time FHA loan applicants have. Here is a list of some of the most frequently asked questions about FHA mortgages. Is There An Income Limit For FHA Loans? No. FHA mortgages are not designed specifically for one type of financial situation or another. You cannot “earn too much” with the FHA single family home loan program. All wage earners are encouraged to explore their FHA loan options. Is There A First-Time Home Buyer Advantage Or Preference With FHA Mortgages? While an individual lender may offer certain perks for first-time home buyers, the FHA single family home loan program itself does not have a first time home buyer | more...

May 18, 2016

Preparing For Your FHA Loan: Important Questions To Ask

By Joe Wallace

Are you in the planning stages for an FHA loan? Considering your refinance loan options? Regardless of which choice you’re making (new purchase or refinance) there are some important questions to ask yourself when preparing to apply. The first of those is one of the most important. “Am I giving myself enough time to prepare?” Some borrowers need more preparation time than others. If you don’t have 12 months of on-time payments on all financial obligations, for example, you should definitely take the time to make sure you bring that to the bargaining table. Lenders will be looking for that 12 months-or-better reliability to establish your creditworthiness. Some borrowers need more time to save up for certain closing costs and, in the case of new purchase FHA loans, the required | more...