Ridley Township Pennsylvania FHA Financing Program Overview

FHA is a financing program where PMI is subsidized by the Federal government. Most major mortgage companies offer FHA program options. Although the program is often used by first time home buyers, it is not solely offered to first time buyers. This blog provides Ridley Township Pennsylvania FHA financing program overview and pre-approval guidance to help you decide whether it is a financing program that you should consider.

Advantages Of FHA Programs

There are a few notable advantages of FHA programs. The required down payment for an FHA mortgage is 3%, which satisfies Ridley Township Pennsylvania home buyers who do not have a large down payment. FHA loans also allow buyers to receive funds for down payment and closing costs as a gift from a family member. An additional benefit of is the streamlined refinancing option that allows a refinance to a lower interest rate without getting a new appraisal, useful if interests rates drop but home values are also low. Finally, FHA loans are assumable, meaning that when you go to sell the house, a buyer can take over your loan at the existing interest rate. This can be a big selling point when interest rates are high.

Downsides Of FHA Financing

There are advantages of FHA programs to consider. The private mortgage insurance (PMI) on an FHA loan is historically higher than a conventional loan. There is an up-front fee at closing and a recurring fee due with each payment until the loan is paid down below 80% of the purchase price (or updated appraised value). For Ridley Township Pennsylvania condominium units, the condo building must meet certain criteria such as minimum reserves and minimum owner occupancy rates. Converted Ridley Township Pennsylvania multi-family buildings and duplexes are therefore unlikely to get approved. Ridley Township Pennsylvania single family homes must also meet certain criteria geared towards safety issues.

FHA Pre-approval Guidance

Before applying for an FHA pre-approval, review your credit score and correct any errors. Also obtain important financial paperwork such as bank statements, tax filings from past years, recent pay stubs, and investment account statements. Banks will normally ask for a copy of these items. Ask a mortgage professional to obtain estimated monthly payments (based on a specific purchase price and your financial qualifications) and closing costs before getting too far in the process.