There are different loan programs and many of you have heard about FHA loan programs. Although it is one of the most common loan programs, it also has a lot of misconceptions that deter buyers from exploring it as a option. Vincent Tomich, from CMG Financial, has outlined some of these myths to give you a better understanding how an FHA loan might be a good fit for you. Feel free to reach out to him if you have any additional questions regarding different loan programs. His full contact info is listed at the end of this post.
Myth: FHA Loans are for First-Time Homebuyers Only.
Truth: FHA loans can be used by all homebuyers. I think that this myth stems from the marketing of FHA loans as a good product for first-time homebuyers because of its low down payment requirements. FHA loans are available for any primary residence and are not limited to first-time homebuyers.
Myth: I Can’t Purchase a Condominium with an FHA Loan.
Truth: If you plan on living in the condo as your main residence, you can get an FHA-insured loan to purchase this kind of property. You can also purchase multi-family homes; the residency rule still applies.
Myth: FHA Borrowers are Poor Risks.
Truth: FHA Borrowers in FY 2014 have an average credit score above 680. FHA credit quality has improved steadily since 2007. Over 40 percent of FHA loans made in every quarter since 2009 had credit scores above 680. In 2006 and 2007, only about 20%of the FHA loans insured in 2006-2007 had credit scores above 680.
Myth: FHA is Experiencing High Defaults and Foreclosures.
Truth :FHA, like every other holder of mortgage risk, incurred financial losses as a result of foreclosures; however, an analysis of FHA data indicates the problem is concentrated in older FHA loans that were affected by the decline in house prices since 2006. There has been widespread improvement in the performance of FHA loans since the market collapsed in 2008. In just the past year, delinquency rates have improved by 14 percent and recovery rates have improved by 23 percent.
Myth: My Bank Won’t Process FHA Home Loans. I should Just Get A Conventional Loan.
Truth: There are plenty of reputable lenders approved and willing to work with you on an FHA guaranteed home loan. It’s true that some lenders refuse to write FHA loans; if your current lender won’t help, ask our trained professionals here at CMG Financial. You’ll find plenty of professionals who want to get you started on the road to an FHA mortgage.