December 5, 2018
FHA home loans for families offer advantages that go beyond the comparatively lower interest rates than for conventional loans (borrower financial qualifications will help determine the actual rate the applicant is able to get from the participating FHA lender). Those advantages are important to remember when comparing FHA loans to conventional equivalents or USDA and VA mortgage loans.
What kinds of advantages? They include the ability to be considered for a second FHA mortgage later down the line if job or family requirements have the borrowers thinking they might be outgrowing their home or need to relocate to be closer to a new job.
FHA Mortgage Loans Allow Financing And Seller Assistance For Certain Closing Costs
Borrowers who need very low out-of-pocket expenses up front will be glad to learn that FHA mortgages allow seller-financed closing cost. Remember that certain costs may not be paid by the seller such as the down payment or any approved closing costs paid above six percent of the sale price of the home.
Sellers and FHA borrowers will need to negotiate this, it is not automatic.
FHA loans also permit down payment assistance. The FHA itself does not offer this and you will need to examine the local housing market or the area you wish to relocate to in order to learn what programs may be offered near you. All down payment assistance must meet FHA guidelines and must be offered to the FHA loan applicant as a genuine gift with no expectation of repayment by the borrower(s).
FHA Loans Allow Families, Friends, And Others To Contribute Down Payment Funds
You can get down payment gifts from a family member, your employer, or other people who have no financial stake in the outcome of the home loan transaction. Your friends, family, or employer will be required to offer such assistance in accordance with FHA loan rules, which means no credit card cash advances or non-collaterized loans can be used to generate source funds for the down payment on your new home.
FHA Loans Permit The Borrower To Apply For Another Mortgage Loan If A Larger Property Is Needed
Are you an FHA borrower anticipating an increase in family size? If so, know that a second FHA home loan is possible in such cases if the borrower can show justification for the new home purchase. An increase in family size is one such justification, another is a job change that requires the home owner to commute outside a reasonable distance to the new employment or promotion.
FHA loan rules have specific requirements in this area and your lender will, Too. Be sure to ask your loan officer what circumstances may justify approving the second home loan you may need when your circumstances warrant it.
FHA Home Loans Can Be Refinanced Into Lower Monthly Payments
The FHA mortgage loan you apply for today can be refinanced at a later date into an FHA Streamline loan which requires a tangible benefit to the borrower such as a lower monthly payment. Don’t forget to ask your loan officer about Streamline Refi options for later down the line. You will be glad you know the option exists.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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