July 25, 2023
There are some home loan options some won’t consider. A shorter loan term is one. In an era where lower monthly payments seem to be the priority for some borrowers more than saving money over the entire course of the loan, a longer loan term makes sense.
But for some, these are essential aspects of the loan to consider. If you can afford to pay more each month on your mortgage, would you do so to shorten your loan term?
FHA Condo Loans, FHA Manufactured Homes
Are you surprised there are separate FHA loans for each property type listed above?
These different loans are needed simply because each property type’s considerations differ. Manufactured homes can’t be older than regulations allow, but existing construction homes don’t have the same rule.
Condo units have different underwriting and loan approval guidelines than manufactured homes. You may find the guidelines for buying a townhouse closer to a condo than a suburban home.
A Shorter Loan Term
Some feel one major disadvantage of a shorter loan term (less than 30 years) is that less of your disposable cash is available to go into savings.
If you don’t mind paying the higher mortgage and can afford to, a 15-year loan term could be an advantage if you want to save more over the entire term.
Younger borrowers with less disposable cash may be less inclined to choose this option, but more experienced borrowers may think twice before deciding which way to go.
FHA Rehab Loans, FHA Purchase Loans
What happens if you fall in love with a house only to find it won’t pass the FHA appraisal process? For some, turning to an FHA rehab loan may help.
Some properties may be renovated with an FHA 203(k) rehabilitation mortgage if they can be brought up to FHA standards as the result of the renovation work.
FHA Farm Loans
Some read about the fact that you can use an FHA mortgage to buy a farmhouse. They assume buying such a property involves buying a farm business but FHA loans are not structured that way.
A farmhouse may qualify for an FHA mortgage but only the residential part of the property. Farm business purchases are not allowed with FHA single-family mortgages.
If you want to buy a farmhouse as your primary residence, an FHA mortgage may be possible. But FHA loan funds cannot be used to purchase farm outbuildings, equipment, or other items that are not classifiable as residential real estate.
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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