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What are the advantages of an FHA loan?
- The borrower’s out of pocket investment can be as little as 3.5% and can be gifted from a family member
- The seller can contribute up to six percent of the home’s price toward closing costs through a seller’s concession
- 100% mortgage insurance to the lender should the borrower fail to meet mortgage obligations
- FHA Streamline refinance loans offer an easy, non-credit qualifying way for borrowers with FHA-insured loans to take advantage of lower interest rates
- Minimum credit score of 580 is required.
- US citizenship is not required but, for those who are not citizens, they must be lawful permanent or non-permanent resident aliens with a valid Social Security Number.
- Pricing adjustments are not as restrictive with FHA loans in comparison with conventional loans. In fact, there is no pricing adjustment on FHA loans with FICO scores greater than 620.
Recent changes make FHA very competitive in today’s complex mortgage market.
- FHA adopted the industry appraisal standards permitting the use of the Fannie Mae appraisal forms with no additional documentation – no valuation conditions form or homebuyer summary
- FHA has eliminated unnecessary requirements to make minor repairs
- The homebuyer and seller, individually or jointly, can pay closing costs as agreed to in the sales contract. FHA no longer limits what closing costs the homebuyer is permitted to pay.
- To provide expanded alternatives to homeowners wishing to refinance, FHA will insure a cash-out refinance up to *95% of the appraiser’s estimate of value.
* Subject to state regulations.
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