FHA is a loan program where private mortgage insurance is provided by the Federal government. Most major mortgage companies offer FHA program options. Although the program is often utilized by first time home buyers, it is not restricted to first time buyers. This blog provides Orlando FL FHA loan program details and pre-approval guidance to help you determine whether it is a loan program that you should consider.
Advantages Of FHA Financing
There are a few important advantages of FHA financing. The required down payment for an FHA mortgage is 3%, which accommodates Orlando FL buyers who do not have a large down payment. FHA loans also allow home buyers to receive money for down payment and closing costs as a gift from a family member. An additional benefit of is the streamlined refinancing option that allows a refinance to a lower payment without getting a new appraisal, useful if interests rates drop but home values are also low. Finally, FHA programs are assumable, meaning that when you go to sell the home, a buyer can take over your mortgage at the existing interest rate. This can be a big selling point when rates are on the rise.
Disadvantages Of FHA Financing
There are advantages of FHA financing to consider. The private mortgage insurance (PMI) on an FHA loan is normally more than a conventional loan. There is an up-front large fee and a repeating fee due with each payment until the balance drops below 80% of the original sale price (or updated appraised value). For Orlando FL condominium units, the condo features must meet certain requirements such as minimum reserves and minimum owner occupancy rates. Converted Orlando FL multi-family buildings and duplexes are therefore difficult to get approved. Orlando FL single family houses must also meet certain criteria geared towards safety issues.
FHA Pre-approval Guidance
Prior to applying for an FHA pre-approval, review your credit report and address any mistakes. Also gather important financial documentation such as bank statements, tax returns from previous years, recent pay stubs, and investment account statements. Mortgage Companies will routinely ask for a copy of these items. Ask a mortgage professional to obtain potential monthly payments (based on a specific purchase price and your financial qualifications) and closing fees before proceeding too far in the process.
Orlando FL FHA Loan Program Details
FHA makes a home purchase possible for some Orlando FL home buyers who may otherwise not qualify for a mortgage, so it is a great alternative to consider. The unique advantages that it offers also makes refinancing and selling a home easier in the future. However, it does have limitations such as the higher fees and property criteria, so not every buyer can or may want to use an FHA loan program. Consider the disadvantages of FHA financing and the advantages of FHA financing offered in this Orlando FL FHA loan program details blog and speak to an expert before making any decisions.
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