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Posted: 9/14/2010 1:19:39 PM EDT
I am 25 and actively looking to buy my first house. My realtor thinks I should look into an FHA loan. I don't know all that much about them, but I can't stand the thought of using .gov assistance in buying a house especially when I don't particularly need it. Can anyone knowledgeable on the subject give me some pros/cons to an FHA loan as opposed to non .gov aided loans?
Link Posted: 9/14/2010 1:22:50 PM EDT
How much of a down payment do you have? You may not have much choice. Conventional financing has gotten real tight in the last couple of years.
Link Posted: 9/14/2010 1:22:55 PM EDT
LOL no one is giving you money if I read your post correctly.
Link Posted: 9/14/2010 1:26:46 PM EDT
[Last Edit: 9/14/2010 1:28:03 PM EDT by ex_dsmr]
Id go do some reading. It seems that youve already got quite a lot of facts wrong.
The only people who will receive government aid are the lenders if someone defaults on their loan.
Link Posted: 9/14/2010 1:40:34 PM EDT


Originally Posted By Ameshawki:
How much of a down payment do you have? You may not have much choice. Conventional financing has gotten real tight in the last couple of years.

10% of my loan amount. Credit rating 780-790 depending on what report.


Originally Posted By MillerSHO:
LOL no one is giving you money if I read your post correctly.

You didn't. I was referring to the fact that other people would potentially pay for my mistakes if my screw my loan up and vice versa.

Originally Posted By ex_dsmr:
Id go do some reading. It seems that youve already got quite a lot of facts wrong.
The only people who will receive government aid are the lenders if someone defaults on their loan.

Yes, but in turn I could get a larger loan with less down and have to pay a premium for other people dicking up their loans. Correct?
Link Posted: 9/14/2010 1:42:34 PM EDT
The fact that you're being steered to an FHA makes me think you don't have 20% down, plus closing costs and reserves.

I believe that FHA (insured) mortgages generally don't offer as good a rate as regular private funding, but tend to enable more people under the wire who private lenders might not lend to in the first place.

Typically, a good solid downpayment and excellent credit puts you not needing the FHA route.
Link Posted: 9/14/2010 1:49:10 PM EDT
Do you plan on keeping this house 5+ years?
Link Posted: 9/14/2010 1:49:35 PM EDT

Originally Posted By seven-six-two:
The fact that you're being steered to an FHA makes me think you don't have 20% down, plus closing costs and reserves.

I believe that FHA (insured) mortgages generally don't offer as good a rate as regular private funding, but tend to enable more people under the wire who private lenders might not lend to in the first place.

Typically, a good solid downpayment and excellent credit puts you not needing the FHA route.

In this area, at least, 5% down is enough for a conventional loan. I think it's 3.5% for FHA. You'll just have PMI tacked onto your monthly payment until you hit the 20% mark.

(We're about to start looking at houses, too. That's the only reason I know those numbers.)
Link Posted: 9/14/2010 2:06:01 PM EDT
[Last Edit: 9/14/2010 2:07:33 PM EDT by DaddysM3]
Originally Posted By Ashraam:

Originally Posted By seven-six-two:
The fact that you're being steered to an FHA makes me think you don't have 20% down, plus closing costs and reserves.

I believe that FHA (insured) mortgages generally don't offer as good a rate as regular private funding, but tend to enable more people under the wire who private lenders might not lend to in the first place.

Typically, a good solid downpayment and excellent credit puts you not needing the FHA route.

In this area, at least, 5% down is enough for a conventional loan. I think it's 3.5% for FHA. You'll just have PMI tacked onto your monthly payment until you hit the 20% mark.

(We're about to start looking at houses, too. That's the only reason I know those numbers.)


Actually FHA mortgages require MMI (monthly mortgage insurance) vs. PMI (private mortgage insurance). Semantics and all. (Upon further review I may have misunderstood the post I quoted. If so please disregard.)

Also on a 30 yr FHA mortgage you will be required to pay MMI for a minimum of 5 years or until the loan is paid down to 80% loan to value based on original purchase price, not appraised value. The only exception is a FHA 15 year with 10% down which will not require MMI.

Lastly, FHA require an Upfront Mortgage Insurance Premium equal to 2.25% of the loan amount. This fee can be paid upfront or rolled into the loan amount (without affecting loan to value and whatnot).

With 10% down and excellent credit I don't think I would look at FHA. PMI should be less per month than MMI, the rate on a conventional should be a bit lower (although not by much) and it will be much easier to drop PMI on a conventional than MMI on an FHA mortgage.

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