December 31, 2019
If you are considering any type of home loan, be sure to explore your options with FHA mortgages, refinancing, or reverse mortgages. FHA loans offer a variety of advantages over conventional mortgages including lower interest rates (based on your financial qualifications), built-in protections for the buyer, and more.
FHA New Purchase Loans
There are many options with an FHA mortgage for single-family homes. New purchase loans include the option to add extra funds to the loan for energy-efficient upgrades or improvements. You can also consider purchasing a fixer-upper using an FHA rehab loan where funds are made available to repair/upgrade the property to FHA minimum standards.
The loans mentioned above are intended for owner-occupied residences and would be not be available for investment properties. An FHA new purchase loan or rehab loan has an occupancy requirement of one year minimum.
FHA Refinance Loans
Some borrowers have existing mortgages they’d like to refinance. The FHA single family loan program has refinance options that include cash-out/no-cash-out for non-FHA and existing FHA loans alike. For those who have existing FHA mortgages, there is also a Streamline Refinance option that features no FHA-required appraisal or credit check. (The lender may require one anyway, but the FHA does not insist.)
These refinance loans also allow the borrower to apply for extra funds for energy efficient upgrades/improvements. This add-on is known as an FHA Energy Efficient Mortgage option.
FHA Reverse Mortgages
Borrowers who own their homes outright (or are very close to doing so), are aged 62 or older, and are financially qualified may apply for an FHA reverse mortgage, known as a Home Equity Conversion Mortgage. Reverse mortgages feature no monthly payment, and a cash disbursement to the borrower (the amount of which depends on the type of HECM you apply for, the interest rate, and other factors).
FHA HECM loans require mandatory counseling for all applicants to be obligated on the loan–there are unique conditions and requirements for HECM loans all borrowers should fully understand before signing paperwork.
For example, there is an occupancy requirement, all property taxes must be paid on time as a condition of the loan, and the home must be maintained in good condition. Your lender will discuss these counseling requirements with you in the application process.
FHA home loans offer many options for borrowers looking to buy or refinance. Explore your options in the new year and get started on the journey toward your new loan.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: