Do I even need an FHA loan?
We're buying a house for 135K and have enough for a 20% down-payment - just barely. We have credit in the 820's. With this in mind, why would my loan officer usher me towards an FHA loan?
It is a little tempting to use the money that I don't spend on the down-payment for a home improvement, but I'm not sure it's worth the mortgage insurance and higher payments.
- lightupthesky25Lv 510 years agoBest Answer
FHA loans are generally for people with lower credit scores and less money to put down (since they only require 3.5%). Also, regardless of how much you put down, with an FHA loan you have to pay an up-front mortgage insurance premium at closing and pay monthly mortgage insurance for the first five years.
There is no logical reason for you to have the FHA loan. Tell the lender you appreciate his/her efforts but do not want FHA, you want conventional. If they won't give you conventional, then find a new lender.
- KLLv 510 years ago
I'm a loan officer and I'm going to be pretty upfront with you...a lot of times FHA loans pay lenders a lot more than conventional loans, and this is with the same interest rates.
For example, if the loan officer offers you a 5% conventional loan, they may be making $2K. On an FHA loan at that same rate they could be making $4K.
This may not be the case but FHA loan only make sense if your credit is below 680 and you don't have a lot to put down.
- 3 years ago
FHA loans are not any more score depending yet use your very last 2 years credit, employment and apartment historic previous. you ought to no longer have any lates in any respect in the previous 24 month era. also, no bankruptcies in the previous 4 years. FHA courses the valuables ought to bypass an inspection besides. Older houses would no longer bypass (roof must have 5 years existence left etc) Your lender ought to describe ALL of this to you. With the decrease down charge you MIP (personal loan insurance suitable fee) requirement will be more suitable that's you placed extra funds down 10%. So in theroy, the decrease interest fee ought to fee slightly you extra month-to-month. Make yourlender instruct you aspect by utilizing aspect both courses. Then evaluate your fee reductions and month-to-month expenses - p.c.. the private loan that perfect matches YOU. desire this helps.
- Go with the flowLv 710 years ago
Yup - you'll still pay PMI which as you know its like throwing thousands away a year.
Since it does not go towards principal, interest, and its not even tax deductible.
Plus, to take off its hard. Some want you to get appraisals (not just one), to be able to prove your home equity value.
Maybe the creditors make money from the PMI company?
Don't let them scam you into variable rates - they are pushing these now since they know interest rates could double.
Very profitable for them. Stick to 15 or 30 year fixed - no scams.
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- Anonymous10 years ago
Put the money down and get a traditional mortgage.
Ask the loan officer to put their logic down in writing for you.
(Odds are they won't)
- Ryan MLv 710 years ago
Put down the 20% and get a traditional mortgage.
- LandlordLv 710 years ago
I would fire that loan officer. They are scumbags.
They are simply looking for the highest commission they can get, not at all what is in your best interest.
Hire someone else and go conventional. If they are low life enough to take advantage of you in this regard they will be ripping you off further. You can't trust this one.
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- Anonymous10 years ago
well, you dont have to... but generally with fha loans you, like you said, dont have to put as much down, but you also tend to get a lower rate.