FHA is a financing program where private mortgage insurance is provided by the Federal government. Most major mortgage companies offer FHA program options. Although the program is often used by first time home buyers, it is not solely offered to first time buyers. This article provides Woburn MA FHA financing program information and pre-approval guidance to help you determine whether it is a financing program that you should consider.
Advantages Of FHA Loans
There are a few notable advantages of FHA loans. The required down payment for an FHA mortgage is 3%, which accommodates Woburn MA buyers who do not have a 20% down payment. FHA loans also allow home buyers to receive funds for down payment and closing costs as a gift from a family member. Another benefit of is the streamlined refinancing alternative that allows a refinance to a lower payment without getting a current 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 house, a buyer can take over your loan at the existing interest rate. This can be a big selling point when interest rates are high.
Downsides Of FHA Financing
There are advantages of FHA loans to keep in mind. The private mortgage insurance (PMI) on an FHA loan is often higher than a conventional loan. There is an up-front fee at closing and a recurring fee due with each payment until the balance is paid down below 80% of the purchase price (or updated appraised value). For Woburn MA condominium purchases, the condo features must meet certain criteria such as minimum reserves and sufficient owner occupancy rates. Converted Woburn MA multi-family buildings and duplexes are therefore difficult to get approved. Woburn MA single family properties must also meet certain requirements geared towards safety matters.
FHA Pre-approval Guidance
Before applying for an FHA pre-approval, check your credit score and address any mistakes. Also gather important financial documentation such as bank statements, tax returns from past years, recent pay stubs, and investment account statements. Loan officers will normally ask for a copy of these items. Ask a mortgage professional to receive estimated monthly payments (based on a specific purchase price and your credit qualifications) and closing costs before proceeding too far in the process.
Woburn MA FHA Financing Program Information
FHA makes a home purchase achievable for some Woburn MA buyers who may otherwise not qualify for a mortgage, so it is a great program to consider. The particular advantages that it provides also makes refinancing and selling a home easier in the future. However, it does have limitations such as the higher fees and property requirements, so not everyone can or may want to use an FHA financing program. Consider the downsides of FHA financing and the advantages of FHA loans offered in this Woburn MA FHA financing program information blog and speak to a professional before making any decisions.
