First time buyers still have a way

First time buyers still have a way

First time home buyers still have an affordable mortgage product available to them. They are FHA loans, and they have been around for years. While regulators can't resist tinkering with it now and then, it is still the best, if not the only, product on the market for those who can't qualify for conventional loans.

FHA loans are government insured. They are designed for borrowers with limited funds for down payment/closing costs and less than perfect (but not bad) credit histories. The down payment can come from the borrowers own savings, or it can be a gift from a relative. As a general rule of thumb, FHA buyers will need 5-6% of the purchase price for their down payment and closing costs, although this can be as low as 3% depending on how the closing costs of the transaction are allocated. They do have mortgage insurance, but the upfront portion of it can be financed, and the monthly premium is lower than that charged on conventional loans.

While credit requirements for FHA loans are less stringent than for conventional loans, you do have to credit references. Non-traditional credit references are

allowed, such as cell phone companies, utilities and car insurance, but these are allowable only to offset a lack of credit and not to replace bad credit.

The interest rates on FHA loans are comparable with conventional loans, and are fixed. Speaking of which…

 

Rates on 30 year fixed rate mortgages shot up about half a point during the stock market's wretched week. Gone until further notice are the "high fives" that were available the week before.

Carl Trawick is a Mortgage Specialist and Licensed Mortgage Broker with the firm Access e*Mortgage. He can be reached at 904-343-1145 or ctrawick@nefcom.net