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Experience with FHA loans?
Last Post 16 Aug 2017 02:53 AM by AustinJWilson. 9 Replies.
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Manis

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26 Feb 2009 07:10 AM
    Okay, so it looks like I am going into escrow. We were originally planning to do 20% down with a conventional loan. We have great credit scores, solid income etc. However, the home we found needs some work to get rid of the 1980's "decor" and the yard is all weeds. So instead of using all our down payment money on the down payment we are thinking to do an FHA loan with 5-10% down.

    Does anyone have any advice on FHA loans in general? Is it harder to get these deals closed? What other fees are there if any? Initially, we thought we did not qualify as we make too much money, but apparently there is no income cap, just a mortgage payment ratio under 31% of gross and an overall cap on the loan amount to be lent.

    I plan to call my mortgage lender contact, but wanted to see what SDLookup users might have to say.

    Thanks!
    jpinpb

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    26 Feb 2009 07:19 AM
    Manis! Congrats! I don't know all the details of FHA. I have a contact that will hook me up when it's time. My understanding is the property does have to be habitable. Was a problem for me for some of the places that were fixers.
    jctunawop

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    26 Feb 2009 12:35 PM
    I am not an expert but I qualified for an FHA loan but am considering 20% conventional to avoid some ridiculous fees in my opinion.
    I can tell you that FHA requires a minimum of 3% down payment, they charge 1.75% of the loan amount for PMI fee and 0.55% (one half of a percent appox) per month that you are above 80% ltv. If i am not mistaken you can choose to finance the 1.75%.

    For example if you bought a 300k house put 10% down you would be financing 270K. Now multiple 270k x 1.75% = $4,725.00. This is for the FHA insurance. So now your loan amount is $274,725.00. Lets say your interest rate 30 year @ 5.5% fixed = 1517.04. Now you also pay .55% of your payment $1517.04 = 126.41 extra each month until you dip below 80% ltv.

    So you are looking at 1517.04 pymt + 126.41 + 300 taxes + 300 (avg) hoa = $2243.45 for a few years until you get below the 80%.

    Hope this helps.

    Fyi. I heard of 203k FHA loan which is a home improvement loan. Should look into that.


    -John

    jctunawop

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    26 Feb 2009 12:37 PM
    sorry I meant a condo not a house.
    tjteru

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    26 Feb 2009 01:25 PM
    I'm currently in escrow on a FHA 203K loan. There are two different kinds of 203K loans you can do. One is a Streamline and the other is Standard. Streamline is for smaller projects that don't require structural work. It's more for remodeling and cosmetic purposes and is much easier to apply for. The limit for remodeling costs is 31k to 34k, depending on whether you are able to get a waiver for the 10% that is held back to cover cost overruns. These programs, require you to work with a licensed and insured contractor. There is a premium on this type of loan though. You can expect to pay about .5 % higher on your interest rate. But you should be able to buy the rate down with points. I'm working with Wells Fargo as my lender, but I went through three different WF agents before I found one that could give me the rate I could live with. There is a lender who posts on here by the name jspoto who does these types of loans also.
    cabbie

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    26 Feb 2009 01:38 PM
    I can tell you this....if you can go conventional instead of FHA do it! An FHA loan has a lot of strings attached, and is a more expensive product over the life of the loan. If you can put 10% down on a conventional loan that can free up more $$$ for renovations.

    FHA issues:
    must attend workshop to apply for Fed Govt. loan
    must go thru one of THEIR approved lenders
    can't sell home when YOU are ready
    Mort. Interest is higher
    appraisals are scrutinizing (not a bad thing in this market)

    I did my loan thru Cal Coast Credit Union....the R.E. dept. is SUPER helpful, I switched lenders in the middle of escrow since Guild Mortgage was a horrible experience! The short sale I bought took 6 months to process, so I banked up the 10% while the sellers putzed around....

    If you do decide on FHA get your certificate thru the San Diego Home Loan & Ed Center on Univ. Ave..the staff there are great, I met my realtor thru them.....the best thing that could have came thru looking into federal funding....

    hope this helps!
    Manis

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    26 Feb 2009 07:57 PM
    Thank you all for the input. I had a feeling it was not quite as good as it sounded. Not that it is bad, just everything has a cost associated with it.

    Anyway, it is official, offer accepted and we're going into escrow! After 1.5 years of searching,I am shifting gears. I will have to start posting about how we've hit bottom and that the market is going up!! Ha! Just kidding, but I will be happy in my new place to ride out the storm.....assuming the best before the home inspection...
    KENlawrence

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    03 Sep 2014 05:42 AM
    Whether you’re a first-time homebuyer, looking to relocate, or just want to move into a bigger place, an FHA loan could be a good option. We decided to apply for 203k loan way back in 2011 at Prospect Mortgage when our septic system got damaged. We badly needed a replacement that time and our best option was a renovation loan.
    GlenVerner

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    16 Nov 2016 11:03 PM
    Nice discussion. Got to learn new points.
    AustinJWilson

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    16 Aug 2017 02:53 AM
    Yeah!
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