Benefits to an FHA Home Loan in Utah:Below we will discuss some of the greatest benefits to using an FHA Home Loan. There are a lot of reasons why a borrower would want to look at the mortgage product over a standard conventional. Due to the fact that there are so many reasons to obtain an FHA loan we will only discuss the benefits that tend to be viewed as the most beneficial.
- High Loan to Value(LTV):FHA loans currently allow the borrower to finance up to 96.5% of the property value. This can be very beneficial if you are looking at purchasing a condo currently due to the fact that many conventional lender’s PMI companies(private mortgage insurance) have lost their appetite for condos. Most PMI companies will not allow for a backend DTI ratio above 45%. What this means is that the majority of first-time homebuyers will not be able to purchase a condo due to the fact that the PMI company will not insure their loan. The way then for the first time home buyer to purchase the condo is to use an FHA loan or to put 20% down. The condo project does need to be FHA approved and if you would like more information feel free to contact me about this
- Lower Credit Scores Accepted:In the current market if you do not want massive loan level price hits for a conventional loan it is important to have a 740+ credit score. This is not the case with an FHA Loan in Utah. Most lenders will accept down to a 620 Fico scores and depending on the scenario you might get an approval with an even lower credit score
- You can Streamline: If FHA rates ever drop you can use an FHA Streamline to drop your rate to the current market rates. They are non credit qualifying loans and are very simple to process.
- Assumable: All FHA loans can be assumed. What this means is that if you have 4.5% FHA loan on your property and in 5 years from now the market average is 10%, your property is worth much more than if it had a conventional note on it due to the fact that the buyer could assume your mortgage.
Costs to an FHA Home Loan in Utah:Taking into account all of the benefits discussed above FHA loans are traditionally more expensive to obtain than a standard conventional loan. We will discuss three elements that affect the overall cost of obtaining an FHA loan.
- Upfront Mortgage Insurance Premium: All FHA loans require a Upfront mortgage insurance premium. Currently that is equal to 1.75% of the loan amount. I.E. if you mortgage is $100,000 than the upfront mortgage insurance premium would be equal to $1,750. This premium can either be paid upfront or financed on top of the loan. This premium is refundable if you sell or refinance within the first several years.
- Monthly Mortgage Insurance Premium: All FHA loans require a monthly mortgage insurance premium of .55% currently. This premium is required no matter what the LTV is on the property. You can cancel it out by either paying the mortgage down to 78% LTV of the original principal balance and by having the mortgage for at least 5 years, or if you are already below 78%LTV than you would just need to keep the mortgage for 5 years.
- More Expensive Appraisals: Typically FHA appraisals are $450.00 vs the standard for conventional appraisal of $350.00. This is not to say that you cannot find an appraiser to do one for cheaper, but rather just that there is typically a higher cost to an FHA appraisal.
Best Places to Find an FHA Home Loan in Utah: If you are looking at finding an FHA Home Loan in Utah, there are three primary sources to obtain one.
- An FHA approved bank
- An FHA approved Mortgage Broker
- An FHA approved Credit Union
No matter where you decide to get your FHA Home Loan in Utah, remember that there are both costs and benefits to obtaining one. I recommend that you select an FHA loan officer who is helpful, knowledgable, and honest.
About the Author
David Frank is a seasoned Real Estate & Mortgage Professional. He is the President/Broker of Frank & Company, LLC. He specializes in Property Management in Utah, Real Estate sales and Real Property Financing. He has over 6 years of full time experience. He also specializes in helping his clients get the best FHA Home Loan In Utah
Author Source:http://www.goarticles.com/cgi-bin/showa.cgi?C=2127110
