FHA loans were created for home buyers with very little to put down and possible low income. It was created to get people into a home they would not qualify for conventionally.
With the insurance from the FHA, lenders were willing to loan to a higher risk level because they had the backing of the FHA and borrowers would go through the FHA extra paperwork and sometimes higher rate just to get the loan.
As conventional lenders began to loosen up the requirements there has became less of a need for FHA loans.
Quite often you will see that many lenders now offer conventional loans with little or now money down at a better rate than an FHA loan would.
I have also found this was also true with VA loans.
I would shop around for all of your possibilities and just go with the overall better deal. Most likely the lender is steering you away from a FHA loan because they are offer you a better deal conventionally.
I would suggest shopping around both types of loans and go with the overall best deal for you.
While the previous poster is correct about the FHA loans being paperwork heavy, until recently, non-FHA loans often had as good or better terms and rates, less money down and were easier to qualify for (and of course, process).
With the tightening of credit in the sub-prime market that may be changing, but in the past several years, every client I worked with that started looking at an FHA or VA loan ended up with a non-government loan.
FHA requires an upfront Mortgage Insurance Premium of 1.5% tacked onto your loan amount and a reduced monthly amount of mortgage insurance. FHA is a great loan for people with little money to put down and less-than-perfect credit. If you’ve got a sizeable down payment and excellent credit this wouldn’t be the loan for you. Go Conforming.
Not all lenders can work on FHA loans. There is alot of extra paperwork invovled. A broker may be able to find you a better deal not goingthe FHA route. At the same time you need to be careful because the better deal might be for the broker that way in spite of what is good for you. You have to do some more research and ask questions. Ask lots of questions.
2011/11/27 at 00:44:18
FHA loans were created for home buyers with very little to put down and possible low income. It was created to get people into a home they would not qualify for conventionally.
With the insurance from the FHA, lenders were willing to loan to a higher risk level because they had the backing of the FHA and borrowers would go through the FHA extra paperwork and sometimes higher rate just to get the loan.
As conventional lenders began to loosen up the requirements there has became less of a need for FHA loans.
Quite often you will see that many lenders now offer conventional loans with little or now money down at a better rate than an FHA loan would.
I have also found this was also true with VA loans.
I would shop around for all of your possibilities and just go with the overall better deal. Most likely the lender is steering you away from a FHA loan because they are offer you a better deal conventionally.
I would suggest shopping around both types of loans and go with the overall best deal for you.
2011/11/27 at 00:27:42
While the previous poster is correct about the FHA loans being paperwork heavy, until recently, non-FHA loans often had as good or better terms and rates, less money down and were easier to qualify for (and of course, process).
With the tightening of credit in the sub-prime market that may be changing, but in the past several years, every client I worked with that started looking at an FHA or VA loan ended up with a non-government loan.
2011/11/26 at 23:40:45
FHA limits the loan officer’s fee to 1% of the loan amount. The only way they can make more is to charge you a higher interest rate.
2011/11/26 at 23:20:39
FHA requires an upfront Mortgage Insurance Premium of 1.5% tacked onto your loan amount and a reduced monthly amount of mortgage insurance. FHA is a great loan for people with little money to put down and less-than-perfect credit. If you’ve got a sizeable down payment and excellent credit this wouldn’t be the loan for you. Go Conforming.
2011/11/26 at 22:33:27
if you don’t have the savings required to qualify for the fha loan
2011/11/26 at 21:37:48
Not all lenders can work on FHA loans. There is alot of extra paperwork invovled. A broker may be able to find you a better deal not goingthe FHA route. At the same time you need to be careful because the better deal might be for the broker that way in spite of what is good for you. You have to do some more research and ask questions. Ask lots of questions.