We offer residential mortgage loans insured by the Federal Housing Administration (FHA). FHA-insured loans
offer many benefits, including lower costs, smaller down payments, increased seller contributions,
easier qualification, and more protection to keep your home. FHA backed mortgages made up almost 50%
of the mortgages in 2010.
| FHA Loans are becoming an Increasingly popular Financing option. |
 |
How a FHA Mortgage Works:
The FHA insures that the total mortgage will be paid to the lender if the buyer defaults. Each lender actually makes the decision whether or not they will lend the money to a borrower.
The FHA mortgage program tends to be more forgiving than conventional mortgages in terms of past credit history. Typically, FHA mortgages do not require more than a 3.5 percent down payment. Unlike traditional loans, this money may also be a gift to the homebuyer and does not need to be secured as the homebuyer's own money.
Borrowers will also have to pay MIP (mortgage insurance premium) on the mortgage. This amount is split into an up-front amount and a recurring monthly amount that is paid with your monthly housing payment. MIP is used to ensure that the total amount of the mortgage will be paid to the lender if the buyer defaults.
Closing costs on FHA loans are usually between 2-3 percent of the total mortgage amount. FHA closing costs can be paid by the buyer at closing, can be financed into the total amount of the mortgage and paid off accordingly or the seller may pay them for you if negotiated as such in the purchase agreement. In a refinance transaction the cost is included in the loan or you can pay the cost out of your own pocket.
Please contact a licensed loan officer for more information and to see if an FHA loan is the best option for you.