The FHA started insuring loans after the Great Depression as a way of helping people get back into owned property. It basically created the 30 year fixed interest mortgage and continues to carefully oversee which homes can and cannot be purchased in its name.
Under FHA rules, the seller may pay up to 6% of the buyers closing costs and prepaids.
Pros: Good option for first time buyers because of low down payment and credit requirements. FHA will accept “soft” credit lines for people who haven’t established credit yet or have very little, so keep that utility bill paid on time. The program allows up to six percent of your closing costs to be financed into your loan, as “seller paid items,” which can help reduce the actual cash you need to close.
Cons: FHA requires a lot more in closing costs because of the additional upfront mortgage insurance deposit. In addition, if you have less than a 10 percent down payment, under the current programs you’ll be forced to keep paying mortgage insurance for the life of the loan, giving you no options but to refinance or sell down the line if you want rid of it (it’s costly, you want rid of it). Not every banker wants to deal with FHA loans because they can be time consuming to write, so you may have to shop a bit to find a good bank.
Find out if you qualify to get a mortgage and begin your dreams of home ownership!
The Rivera Team, Aidel & Yolanda
Keller Williams Realty Augusta Partners
706.394.4550 Aidel or 706.394.4547 Yolanda