What are the pro's and con's of FHA loans?
I am about to get an FHA loan on a $63,500.00 home.I am clueless about these or any loans. We are first time home buyers and my husband and I are both in our 40's. The bank man told me to ask the buyer to pay closing cost which will be approx $3800.00, is this normal for the seller to pay that? The ad on the house said must sell FAST, this is because they have already purchased another. The house is in good shape, new central heat & air, new vinyl siding, new replacement windows, new roof. Looking for some outside advice. Sorry so lengthy.
Thanks in advance, GRTHFN
- Anonymous1 decade agoFavorite Answer
Pros and Cons of a FHA loan are numerous:
Low down payment of 3% minimum
high debt to income ratios
lower credit scores
govt insured loan
full documentation: (there's not any type of no doc loans here)
co-borrower does not have to be a relative nor d they have to live there
can buy a house after a foreclosure in 3 years
Mortgage Insurance is required almost throughout the loan until you can prove the loan balance is value is 78%of the home value.
Forgot to mention the FHA 203K rehab loan. FHA has some excellent choices for people with high or low credit scores
It has served many people well, normal homeowners and investorsSource(s): http://ezinearticles.com/?FHA-Loans-on-the-Rise-to... http://www/mortgageloanshop.net/fha-lenders.html
- RachyLv 61 decade ago
Typically FHA loans are for people who can't qualify for a typical loan. That's one of the reasons why Fannie is in such trouble now, they lend to normally un-qualified borrowers. You and/or your husband likely either have no savings or bad credit.
There's nothing really special out there for first time homebuyers anymore. I bought my first home last year and got nothing special.
FHA loans are not fast, they take a while to get through. If you want fast, you'll have to go through your 'typical' large mortgage company- Wells Fargo, Taylor Bean Whittaker, AmTrust, etc. Through those companies it can be done in a few days. It took me 10 days from signing my purchase contract to signing my papers and moving in- but I have good credit and a sizeable down payment.
Asking the sellers to pay closing costs is a good idea. If sellers want to sell, they'll agree to pay your closing costs since they can range from $3,000 to $8,000 dollars and most buyers want that assistance.
Good luckSource(s): First time homebuyer 9/07, mortgage underwriter
- Anonymous1 decade ago
It is not that uncommon to ask the seller to pay closing costs, especially if you offered a price fairly close to the asking price. In real estate, everything is negotiable. What might happen is that the seller will come back and offer to pay half the closing costs and you pay half. Still, that will save you nearly $2000. Never be afraid to ask for something when dealing in real estate. The seller can always come back with his own counter-offer if he thought you asked for too much.
- abigreturndotcomLv 51 decade ago
Sure! If they need to sell fast you have the advantage. Just do not let them rush you! get them t pay the closing costs, they will. Also get them to pay for the inspection as it might turn up something that you did not account for. Congratulations on buying your first house!
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- dempsyLv 43 years ago
professionals: long term low fixed expenses decrease credit or sub top debtors can qualify Can borrow over the common 80% LTV Cons: properties will require greater effective inspections the homestead itself has to qualify lots of workplace work