The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.
Financing your home through FHA…
I mentioned one FHA loan type last week, the 203K (Rehab) loan and realized that it might be helpful to describe all the FHA loan types available. Why? Because FHA loans are one of the most common financing options in the real estate market. They offer low down payment requirements and have a multitude of uses and types for financing various dwellings.
FHA Loans are limited to homes with a purchase price of $271,050 in Alabama with Baldwin County as the exception with a maximum loan limit at $285,000. These rates apply to single unit homes. There are higher limits for multiple unit homes, i.e. Duplex, Triplex, and Quadplex properties.
FHA 203b Loan… FHA 203b loan is the most common types of FHA loans and offers a fixed rate mortgage that can be range in terms from 10 to 30 years. It is specifically intended for single-family housing units.
FHA 203k Loan… The FHA 203k loan is designed for properties that are in need of rehabilitation and financing. The fixed rate term of the loan amount ranges from 10 to 30 years, and an additional loan amount is granted to the individual financing it in the form of an escrow account, allowing the individual to make needed repairs to a property immediately after purchase.
FHA 203c Loan… The FHA 203c loan is designed for the purchase of a condominium or apartment; it is designed to finance one unit in a multi-family dwelling, and is ideal for individuals living in urban areas. This is a fixed rate loan that can range in terms from 10 to 30 years.
FHA HUD Financing… This type of financing is designed specifically for the purchase of FHA foreclosed properties. These homes offer down payments as low as $100 in addition to up to $2,500 in closing cost assistance directly from the Department of Housing and Urban Development. Financing for these homes will range in terms of 10 to 30 years, and offer a small repair escrow for any needed repairs found by an independent inspector.
FHA Buy Down Loan… An FHA buy down loan is a fixed rate mortgage that allows home buyers to pay a fee of $1,000 to reduce their interest rate for one year. If the market rate on FHA loans is 5 percent, for example, a home buyer could pay an additional $1,000 to have that rate reduced to 4 percent for the first year of the loan.
Adjustable Loan (ARM)… Similar to an FHA buy down loan, an adjustable loan offers a home buyer reduced interest for the first three to five years without paying a penalty. The difference is that the rate will continue to increase by up to 5 percentage points after the initial lower rate, meaning that home buyers could pay a much higher amount in interest charges and fees once the initial period ends.
May the market be with you.
