The pros for a FHA loans are that it makes it easier for San Diego HomeBuyers to qualify for a mortgage, you don’t have A+ credit, you just have to have decent credit. It is easier to use a “Gift” (from relatives and friends) for your down payment or closing cost. You can finance home improvement into you loan if you’re buying a fixer upper. Your down payment can be as little as 3.5% and you can also finance your monthly mortgage insurance, and this is about to cost less – more on that latter.
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The Cons for a FHA Loan are first and foremost the availability of FHA approved complexes in San Diego County. This is a big deal, you cannot use FHA on a non-approved complex, saying that, this limits the inventory throughout the city. I would hesitate to guess but I’d say going FHA limits you to about 30% percent or less of the current condo inventory in San Diego. FHA requires that the owner occupancy level of a condominium complex to be above 51% in most cases, this also limits the availability of inventory. You can have an FHA approved property and still not qualify due to low owner occupancy levels. There are no longer spot approvals.
Changes
The following changes are coming to FHA loans with amortizations greater than 15 years: this will be effective for case numbers ordered on/after October 4, 2010:
1) The upfront mortgage premium will be reduced from 2.25% down to 1%
2) The monthly mortgage insurance of 0.55% will be increased to 0.85% to 0.90% per month depending on LTV
So on the old scenario, a $100,000 loan had a upfront fee of $2,250 with a final loan amount of $102,250 and a monthly MIP fee of $45.83
The new scenario, a $100,000 loan has an upfront fee of $1000 with a final loan amount of $101,000 and a monthly MIP fee of $75
So as of October 2010 you will be able to significantly save on financing your upfront mortgage fees which could save you thousands and you’ll see an increase on your monthly MIP fee.
Sounds good to me.
