What are the terms/options for FHA loans?

Question

My closing day is week from today. I applied for conventional loan like a month ago. The loan people provided me with the information for 5/1 IO ARM which has reasonable monthly payment. I thought I was all set. I have received gift fund from my parents for closing. I have told them about this earlier. Now, month later they told me that my loan is approved with condition and I need to have 5% of my own asset for for closure. I only saved up to 4% and this doesn't meet the requirement. They should have told me this earlier. Now they want me to switch to FHA loan with 3 year fixed paying principal and interest which after 3rd year the rate will increase up to 1% annually. I don't feel safe with 3 year fixed. The market is not doing good these days and my friends recommended 30 yr fixed. Is there 30 yr fixed for FHA loans and if so I guess the rate will be higher? Is FHA loan better than conventional? I have good credit score. This is so stressful since I am first time buyer.

Answer 1

Yeah... your situation... it could happen. Don't worry though. If you have a pro, it will all work out fine.



FHA 3Yr ARMs today are pricing right about 6.0%, 5Yr ARMS at 6.25% and 30 Fixed at 6.5%.



Bonus! You might be able to leverage your situation to get more closing costs out of the seller. You probably have 3% being paid to CCs, but FHA allows the seller to pay up to 6% (this could cover ALL of your closing costs) AND FHA MI is LOWER!



Come to think of it... why didn't your mortgage guy offer FHA to begin with?



Best of luck.



PS. An new FHA loan WILL (likely) TAKE more than 2 weeks to close. You can always get a contract extension. You (likely) have a financing continigency in your contract, so you are in the negotiating driver seat.

Answer 2

The vast majority of FHA loans are fixed rate, fixed payment, 30 years loans. Called 203 b loans.



I think you have a bad loan officer if you are not being communicated with. This is happening more and more with the technology we are using.



You need to actually sit down with someone and talk face to face and ask a lot of questions about loans. Someone that has been doing this for a very long time and knows what programs are available and what the underwriting requirements are going to be.



I don't know if this can be put together in a week. FHA may require a different appraisal (or maybe the appraiser can simply re-enter the data on an FHA form).



The only hope you have for closing this is to find out today what can be done and get it done right away.

Answer 3

FHA loans are NOT rating established however use your final two years credit score, employment and condominium historical past. You MUST no longer have any lates in any respect within the prior 24 month interval. Additionally, no bankruptcies ago four years. FHA methods the estate MUST go an inspection as good. Older properties would possibly not go (roof have got to have five years existence left and many others) Your lender will have to provide an explanation for ALL of this to you. With the minimize down cost you MIP (loan coverage top rate) requirement will likely be bigger that's you set extra money down 10%. So in theroy, the minimize curiosity fee might fee you extra per 30 days. Make yourlender exhibit you facet through facet BOTH methods. Then compare your financial savings and per 30 days fees - decide upon the mortgage that pleasant FITS YOU. Hope this is helping.

Answer 4

I am also a first time buyer going thru an FHA closing in two days. It is possible that they can get it closed on time, but you have to let them know quick.. The only thing with an FHA is they send an FHA appraisor out and the house has to be in good condition. Don't let that scare you, but yes it can cause you to lose the deal. Some sellers will not go FHA because it requires sellers to go to an extra expense. You will have to get the seller to agree..... Yes, you can get 30 year fixed with FHA and DO NOT get a loan with a changing rate...



I can tell you I never ever want to buy another house after I get this one closed... It is a real big head ache... I wish you the very best...

Answer 5

yes there is a30 fixed not ewith FHA closing depends on underwriting turn times and which lender gets the loan. Fixed rates are higher than adjustable but you do not have to refi down the road. Also the home you are purchasing must be FHA approved by the appraisal but a good loan officer can get a rush on the file. with fha you have to have 3% down of your own money