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The FHA 203(k) Program - How It Is Different From a “Regular” Mortgage
The FHA 203(k) program is different than most other home mortgage financing options in that the 203(k) loan accounts for the value that the house is *going to be worth* once repairs are done.
There are 3 eligible situations where an FHA 203(k) mortgage can be done:
- To purchase a house on a plot of land and rehabilitate it (the most common)
- To purchase a house on another site, move it onto a new foundation on the mortgaged property and rehabilitate it (less common)
- To refinance an existing mortgage and rehabilitate such a dwelling (also less common)
Without the 203(k) program, if you wanted to buy a house that needed repairs (the most common situation) or you just wanted to modernize the house – you would first have to obtain a mortgage on the as-is condition and value of the home, go out and find additional financing (HELOC, 2nd mortgage, your mother-in-law), improve the house and then get your ideal long-term mortgage in place.
Arizona Reverse Mortgages
Many people choose to live in Arizona because of our great weather. Ok — let me re-phrase that — many people choose to live in Arizona between 6 and 9 months a year because of our great weather.
Some of those lucky few who migrate north for our super-hot summer months are getting more and more interested in a mortgage product called a Reverse Mortgage.
Did you know that FHA insures Reverse Mortgages?
They do!
The program is called The Home Equity Conversion Mortgage (HECM).
This program has become more and more popular due to the increase in home prices (equity available) and the aging demographics of America.
FHA 95% Cash Out Options
FHA recently added a 95% cash out option to their loan options, which allow borrowers to cash out limits of up to 95% of the home’s value and use the money for just about anything, from paying off medical bills to eliminating debts in collection, from buying a new truck to going on vacation. This has been one of the most popular loans that we have done over the last 6 months.
While homes must fall within a certain price range to be eligible for FHA loans, there is no limit on the income of the borrower. While conventional loan programs have, for the past several years, been somewhat more popular than FHA loans, the FHA 95% Cash Out loan has some borrowers thinking twice.
FHA is becoming a popular Arizona Mortgage option
Most people already know that FHA is short for Federal Housing Administration – it is all over the news in recent months. And as you may also know – FHA doesn’t actually lend anyone money, they only insure loans that are underwritten to certain criteria.
Some of the most common questions that I hear regarding FHA programs include:
- What is FHA mortgage insurance and how does it work?
- Why would I want an FHA mortgage?
- Is FHA new? How long has FHA been in existence?
What is PMI and do you need it?
If you are buying a home chances are the topic of PMI has come up, and you’ve wondered what it is.
PMI stands for Private Mortgage Insurance, and is an extra fee built into your monthly mortgage payment designed to protect lenders against foreclosure costs. The protection is provided by third-party PMI companies, which work in a way that is similar to other types of insurance companies.
PMI is calculated on a sliding scale based on your LTV (loan-to-value) and your credit score and generally speaking, the more money that you put down when buying your house, the less PMI you will have to pay. So if you put down 15%, you could expect to pay less than if you put down 5%. The general range for PMI factors is .25% to 2%. If you really want to see what a PMI chart looks like, here is one — confusing!
And here’s something else you might not know… not all loans require PMI.
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Arizona Mortgage Newsletter
