Our mortgage friend, Judy Giel, gave us some great info we’d like to pass on to our downtown Phoenix home buying friends. Specifically we are looking at buying a home or condo with an FHA loan. We will be adding our own thoughts to those provided by Judy. If you have specific questions, we invite you to call Judy Giel at Guild Mortgage. She’s been in the mortgage industry for a long time and is very savvy. You can reach her at firstname.lastname@example.org or 480-499-3153.
Downtown Phoenix Home Buying & FHA
Let’s take a look at some of the features and benefits of an FHA loan.
- Traditionally, FHA mortgages were used to assist first-time home buyers with non-traditional credit backgrounds. However, FHA loans have increased in popularity over the last several years for good reason. The low 3.5% down-payment requirement helps buyers get in the door when they don’t have big down-payment dollars.
- Move-up buyers are increasingly turning to FHA loans to help meet the gap between what they may owe when selling their home and the cash they’ll need to close on a new purchase.
- Did you know that FHA loans are assumable? When you go to sell your downtown Phoenix home, qualified buyers can assume your original mortgage. Since conventional loans are never assumable, there can be advantages to an FHA loan.
Other little-known facts about how an FHA loan might help borrowers in the following financial circumstances:
- Chapter 7 Bankruptcy — You may qualify as soon as two years from the Discharge Date of your bankruptcy or one year with extenuating circumstances. A conventional loan generally requires five years.
- Chapter 13 Bankruptcy – You may qualify for an FHA loan during your bankruptcy with permission from the trustee and 12 months of on-time payment history.
- Cash Down Payments – If you are using personal cash for a down payment that has not been in a bank, there are rules. For some reason the government doesn’t like untraceable cash so you’ll need to show where you got it. BTW: Drug deal is a bad answer.
- Down Payment Funds can also come from savings clubs, wedding registries, gifts from employer, cash on hand, Down-payment Assistance Programs.
- Unlike Conventional loans, FHA has flexible credit guidelines that can help buyers obtain financing to buy.
Problems Some Home Buyers Experience With FHA Loans
- FHA does their own inspections and has some rules about what has to be repaired or updated before they will approve the loan. This can be a problem, especially with historic properties that do not meet their requirements.
- Some home sellers simply do not accept offers from buyers using FHA loans. Again, this is most often seen with properties that are not likely to make it through the FHA inspection and acceptance process unscathed.
- Many downtown Phoenix condos do not meet the FHA guidelines and can not be sold to FHA buyers. If you are planning on buying a condo, we strongly recommend you work on qualifying for conventional financing. Conventional financing does not have near the restrictions FHA does on condos.
- Check with your lender regarding PMI costs. FHA raised the fees associated with mortgage insurance required when people are putting less that 20% down. You may find the monthly payments are significantly higher for an FHA loan verses a conventional one. This is a case by case situation you’ll want to talk to your lender about.
NOTE… Mortgage products such as FHA loans change a lot. What may hold you back from qualifying today may change a month from now. Work with a knowledgeable, full-time mortgage person… they are most apt to be on top of the changes and keep you well informed. In other words, let the people who have not read this article work with a newbie, not you on your downtown Phoenix home buying journey.
Keep safe and happy,
Gene Urban and Ron Urban
The Urban Team at Realty Executives
connecting people to the perfect place for over 20 years.