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FHA home loan CastaicPrimer on FHA Loans

In order to qualify for an FHA home loan Castaic you must put a 3.5% down payment on your home in order to receive FHA financing. FHA does not actually underwrite the loan or lend the money. Instead they offer a government backed guarantee to institutions that are approved FHA lenders.They also are a bit more relaxed on borrower qualifying.

Although this seems difficult, most lenders offer FHA loan programs. The most popular are the 30 year fixed and the 15 year fixed mortgages. Just view FHA as an Insurance Company to better understand it.

Furthermore, the maximum dollar amount a borrower can borrow with FHA depends on the county in which they are trying to buy their home. Each county has a medium home sales number that represents the average price of a home in their county, which is the number that FHA uses as a maximum that a borrower can borrow in that county. This maximum is not the maximum sales price, but the maximum loan amount.

In order to receive regular FHA mortgage interest rates, the loan amount cannot exceed $417,000, although many counties are not even eligible for such a large loan amount. On the flip side, some counties exceed the $417,000 limit. San Francisco County’s medium home price is around $625,000, and possibly more in neighboring bay area counties, but nevertheless, FHA will only allow up to $625,000 maximum. Interest rates will be higher for loans over $417,000 and under $620,000, and regardless of the loan amount, or interest rate, FHA will always require a minimum down payment of 3.5%.

Furthermore, FHA is not a credit driven program. Borrowers with credit scores as low as 600 to 640 points can usually qualify if they have sufficient income. FHA is an INCOME driven program. If you can show a 2 year history of enough income to be able to pay the Principal, Interest, Taxes and Insurance on the property you want to buy or refinance, you will more than likely qualify for an FHA loan.

The fact that FHA is not credit score driven also allows those with good income, and a sufficient down payment, but average credit to also use FHA to qualify for a loan.Mortgage rates Castaic are low and FHA lenders are busy.

Generally to determine if you earn enough income, you will need to earn a little more than twice the mortgage payment. If you have other additional debts, you will have to earn twice the mortgage payment plus the monthly payment on the debts you have.

For example, if you decide to buy a home and your Principal and Interest, Property Taxes and Insurance payment is going to be $1,000 dollars per month, and you also have a car payment of $300 per month then you will have a total debt of $1,300 per month. A good rule of thumb in this scenario is that you will need to earn about $2,800 per month in order to qualify for an FHA loan.

For the “privilege” of getting an FHA loan, additional closing costs will apply. First, you will pay a 1.75% up front fee. For a $200,000 loan, this will add $2,750. Furthermore, you will also pay a 1.25% fee, each month, on top of your mortgage payment. For example, if your mortgage loan is for $200,000 your extra monthly fee will be 1.25% of $200,000 or $196 per month

Therefore on a new home purchase, your $200,000 loan will end up at $202,750. In order to complete the loan, you will not only be responsible for the down payment but also the closing costs. Sometimes, in this environment, closing costs or a portion of the closing costs are paid for by the seller, and FHA does allow up to 3% of the sales price to be deducted from your closing costs. For example if your closing costs, which include lender fees, title fees, and other fees to numerous to detail here, come to $8,000, FHA will allow the seller to deduct this part of the money from their proceeds. Seller paid closing costs happen most often when a seller is motivated to sell, either because of extenuating circumstances or their home has been on the market for a long time.

FHA home loan Castaic is easy following our experience. For more information on FHA Mortgages, contact us at www.MortgageConsumer.com or call 877-244-9190

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