FHA loans can be great deals for families with smaller down payments and for people in very high-cost housing areas. In fact, in areas where real estate is expensive, borrowers can take FHA mortgages for as much as $$636,150, but the limits vary from place-to-place. One of the differences between conventional and FHA loans is the required down payment. For buyers with a 580 or higher FICO score, the down payment is 3.5 percent.
Conventional loans require a higher FICO score of 680 or higher and generally a minimum of 5 percent down, but lenders might ask as much as 10 percent or even 20 percent, depending on the purchase price and buyers credit score. Sellers generally consider that FHA buyers might have less cash and therefore less wiggle room on their loans. This can sometimes mean buyers can’t close the loan in the end or that they will need more concessions in the deal. That’s certainly not always true.
Standards for inspection and appraisal are more stringent with FHA loans. Sometimes these standards get in the way of a quick sale. Something as simple as peeling paint can interfere with getting an appraisal finished, so there can be delays in both the process and in loan approval times. We have not had a small appraisal issue like this interfere with any FHA closing that we’ve been involved with. The bigger issue is our prices — Pasadena is a generally high price area, and the FHA loan limits cause buyers to turn to conventional financing more. However, it’s a myth that FHA buyers are lower income.
Today the FHA has a variety of loan guarantee programs for first-time borrowers, reverse mortgages, and refinances. The percentage of FHA loans in the mortgage market is about 25 percent.
Plumbid – a new and innovative way to market and sell your home!
Thanks for reading about Conventional mortgages over FHA?! On another matter, how would you like a way to get 12% or more over asking price for your home? We recently sold a private view home for that amount over the list price because of the Plumbid bidding process. And buyers were solid — fully qualified and informed about the property before they could bid. Check here, or call or text the DeFazio’s for more information at 626-825-9955.
And, if you are moving to Pasadena, we can help you. With more than 50 years of combined experience, we know the territory and can find the best property for you.
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