Learn About Some Important FHA Loan Features
May 27, 2024
What special features do FHA mortgages offer first-time homebuyers and repeat borrowers alike? There are several options to be aware of when you are in the planning and saving stages of the home loan.
Finance Certain Closing Costs on Your FHA Mortgage
Borrowers who don’t pay 10% down on an FHA mortgage pay the mortgage insurance premium for the loan's lifetime. It pays to make the larger down payment on an FHA mortgage, even if you don’t have to.
But if you want to save money upfront on your home loan, you can include the FHA Up-Front Mortgage Insurance Premium in your home loan amount. Ask your loan officer about this option early.
You’ll be required to pay the entire amount in cash or finance the entire amount at closing time, no partial payments are accepted.
Automatic Contingency Clause
Typically, you must negotiate if you want a contingency clause, such as making the purchase of the house contingent on the home passing the appraisal process.
But with FHA loans, the appraisal contingency issues are automatic and the seller must abide by that clause even if it is not specifically mentioned in your paperwork.
If the house appraises for less than the asking price, you can walk away from the loan without forfeiting your earnest money.
No Penalty for Early Payoff
When selling or refinancing the home you buy with an FHA mortgage, the lender is forbidden from charging you an early payoff fee.
Different Loans Serve Different Needs
If you apply for a purchase loan to buy a home, which must pass the FHA appraisal process, if there are extensive issues with the property, the purchase loan may not be possible.
But if you find such a house and switch to an FHA rehabilitation mortgage, the appraisal becomes an issue only after the renovation work has been done. The home’s appraised value after the renovation will be the applicable one moving forward with the loan.
Add-Ons
FHA mortgages allow addons to the loan, such as the FHA energy-efficient mortgage package, which provides extra loan funds for approved energy-efficient upgrades to a home. Depending on circumstances, you can use this with a new purchase loan, renovation loan, or refinance loan.
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RELATED VIDEOS:
Annual Income Requirements for FHA Loans
Good Credit History Helps Get FHA Loans
Stay Informed About Your Mortgage Closing Costs
Finance Certain Closing Costs on Your FHA Mortgage
Borrowers who don’t pay 10% down on an FHA mortgage pay the mortgage insurance premium for the loan's lifetime. It pays to make the larger down payment on an FHA mortgage, even if you don’t have to.
But if you want to save money upfront on your home loan, you can include the FHA Up-Front Mortgage Insurance Premium in your home loan amount. Ask your loan officer about this option early.
You’ll be required to pay the entire amount in cash or finance the entire amount at closing time, no partial payments are accepted.
Automatic Contingency Clause
Typically, you must negotiate if you want a contingency clause, such as making the purchase of the house contingent on the home passing the appraisal process.
But with FHA loans, the appraisal contingency issues are automatic and the seller must abide by that clause even if it is not specifically mentioned in your paperwork.
If the house appraises for less than the asking price, you can walk away from the loan without forfeiting your earnest money.
No Penalty for Early Payoff
When selling or refinancing the home you buy with an FHA mortgage, the lender is forbidden from charging you an early payoff fee.
Different Loans Serve Different Needs
If you apply for a purchase loan to buy a home, which must pass the FHA appraisal process, if there are extensive issues with the property, the purchase loan may not be possible.
But if you find such a house and switch to an FHA rehabilitation mortgage, the appraisal becomes an issue only after the renovation work has been done. The home’s appraised value after the renovation will be the applicable one moving forward with the loan.
Add-Ons
FHA mortgages allow addons to the loan, such as the FHA energy-efficient mortgage package, which provides extra loan funds for approved energy-efficient upgrades to a home. Depending on circumstances, you can use this with a new purchase loan, renovation loan, or refinance loan.
------------------------------
RELATED VIDEOS:
Annual Income Requirements for FHA Loans
Good Credit History Helps Get FHA Loans
Stay Informed About Your Mortgage Closing Costs
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