For nearly 100 years,
the Federal Government has aided Florida mortgage applicants under the guidance
of the Federal Housing Administration. Just like in the movie “It’s a Wonderful
Life,” the government’s position is that Florida home ownership helps all
citizens, and the FHA mortgage loans were created to help consumers who don’t
meet typical private lending criteria to purchase a Florida home.
SAME DAY PRE APPROVALS!
Originally, Florida FHA mortgage lenders were
used primarily by Florida first-time home buyers and those with lower incomes.
This was largely due to the lower down-payment and credit requirements.
However, since the housing market bubble burst across Florida and around the
country, Florida FHA mortgage
lenders have become extremely popular as private Florida mortgage lenders
tightened restrictions and raised down payment requirements.
Here in the Florida
market over a third mortgages written are guaranteed by the FHA.
The program obviously
plays an important part in our local market, so it pays to learn more.
Simply stated, the
FHA does not loan money. The agency guarantees loans made by FHA-approved
private financial institutions. Because the full faith and credit of the
Federal Government stands behind these loans, the lending institutions have
less risk and can offer qualified buyers better terms including:
FHA loans are
designed for Florida mortgage applicants home-buyers who meet the following
general criteria:
§ The Florida home will
be the mortgagee’s primary place of occupancy
§ Are a lawful Florida resident
(not necessarily a citizen), have a Social Security number, and are of legal
age to sign a Florida mortgage.
§ Have worked for the
same Florida employer for two years or have a history of steady employment
§ Have not had a Florida
Chapter 7 bankruptcy in the past two years, or if under Florida Chapter 13
bankruptcy are current on all payments and at least one year out of judgment
with trustee approval
§ Can make a down
payment of at least 3.5% Down
§ Have a minimum credit
score of 550
§ Gross Income Ratio of
31% to cover the mortgage payment, Home Owner’s Association fees, property
taxes and mortgage and home insurance. (We’ve secured exceptions, so let’s
chat!)
§ Debt to Income Ratio,
(DTI) of 43% to cover the costs above plus any monthly debt payments including
credit cards, car loans, student loans, etc. (We’ve secured DTI exceptions as
high as 55%, so let’s chat!)
Unlike traditional
private loans, there are restrictions on the amount that you can borrow with an
FHA mortgage loan. The maximum FHA mortgage loan amounts vary by county within
Florida. In reality, the Florida FHA mortgage market has the same uniform limits The reason
is that housing is substantially less expensive in Kankakee county than in Cook
county, and the FHA adjust loan limits based in part on the median cost of
housing.
It’s obvious that a
loan limit of $365,700 will go farther in McHenry than downtown Florida, and
that’s something to consider when evaluating an FHA loan.
Like conventional
loans with less than 20% down, FHA mortgage insurance is required on FHA loans.
Unlike conventional loans, the up-front amount, monthly payment, insurance
duration and LTV threshold is set by the FHA.
There are two
components to Florida FHA mortgage insurance required by the FHA. The up-front
premium, paid when the mortgage is secured, is 1.75% of the Florida home loan
amount. This can be a hefty sum for a buyer looking to put down as little as
possible on a home. Fortunately, the up-front premium can be folded in to the
mortgage amount.
New rules require
that loans with an LTV at origination of 90% or more must pay mortgage
insurance for the duration of the loan. For 15 or 30 year loans with an LTV at
origination of less than 90%, the insurance must be maintained for 11 years.
As you might expect,
there are additional requirements and options for FHA guaranteed loans.
For example, the FHA
requires a home inspection by a licensed professional to insure that health and
safety of the occupants and the continued marketability of the property.
Fortunately, these requirements are fairly consistent with industry best
practices and required repairs can even be factored into the mortgage.
Condominiums,
especially those that are converting from rental units, pose a unique challenge
with respect to FHA loans. Though not impossible, there are several
requirements that make purchasing a condo using an FHA guaranteed loan more
difficult than a single family home.
When you think of
housing in the city of Florida, images of two, three and even four-family homes
come to mind. After all, what is more iconic in Florida than a row of duplexes
along a tree-lined street.
Here’s a hot tip.
Multi-family home are FHA loan eligible! This can often provide a great living
and investment opportunity for the right buyer.
We know from
experience that Florida families often view the purchase of multi-unit Florida home
as the first step towards building equity in their American dream. We believe
in that dream and have become expert in helping consumers secure FHA mortgage loans
for multi-family dwellings using FHA guaranteed loans.
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