California Real Estate Podcast with Andrea Manroe - What Is an FHA Loan and How Can It Benefit You?

What Is an FHA Loan and How Can It Benefit You?

02/23/17 • -1 min

California Real Estate Podcast with Andrea Manroe

If you’re looking to buy a home, you might consider taking out an FHA loan. I’ll go over what an FHA loan is and why it might be a good option for you as a buyer.

Thinking of selling? Get a free home valuation

Thinking of buying? Search all homes for sale on the MLS

If you’re looking to buy a home, you’ve probably heard the term “FHA loan.” Today I’ll go over what an FHA loan is and how it can benefit you as a borrower.

An FHA loan is a mortgage that is insured by the Federal Housing Commission that requires a lower down payment on the condition that buyers pay property mortgage insurance as a part of their monthly mortgage payment.

The property mortgage insurance allows lenders to offer loans to borrowers at much more attractive interest rates with lower down payments. You can qualify for an FHA loan with a lower credit score as well.

The minimum down payment on an FHA loan is 3.5%, but it can be as high as 5%. Borrowers can use their own savings, a gift, or a grant for their down payment. The FHA does allow borrowers to get assistance from their lender, the builder, or the seller to help with closing costs. Although, if the lender helps with closing costs, they typically charge a higher fee on the loan.

The FHA is an insurer, not a lender, so it’s important to get your FHA loan from a qualified FHA lender.

FHA loans also require a two-part mortgage insurance. The first part is paid at the close of escrow, which is equal to 1.75% of the purchase price and can be rolled into your loan. The second part is paid during the life of your loan.

The FHA also has a special loan product for borrowers who are purchasing a private property that may need repairs called the 203K.

The F...

If you’re looking to buy a home, you might consider taking out an FHA loan. I’ll go over what an FHA loan is and why it might be a good option for you as a buyer.

Thinking of selling? Get a free home valuation

Thinking of buying? Search all homes for sale on the MLS

The F...

Previous Episode

What You Need to Know About PACE & Hero Loans

Have you ever considered seeking PACE or Hero Program financing for your home? It's a great government incentive, but it's important to know the finer details before taking on this loan.

Thinking of selling? Get a free home valuation

Thinking of buying? Search all homes for sale on the MLS

Today I wanted to take a moment to talk about PACE loans—also known as Hero loans.

PACE financing stands for 'property assessed clean energy' and provides local governments the opportunity to provide financing for homeowners that want to do projects that are either energy efficient, water efficient, or integrate renewable energy products into their home.

In California, the Hero Program is the most well-known opportunity for homeowners to receive this type of financing. It's considered a tax lien in first position on the property, meaning upon the sale of the home, it will be paid prior to any other creditors involved in the property being paid. This even includes the lender on the home mortgage.

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PACE financing lets local government loan money for energy-efficient home projects and features.

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This first position is important because the Federal Housing Financing Agency won't allow Freddie Mac and Fannie Mae to lend on houses that have Hero liens in the first position on the mortgage. This is very important because it can make it difficult for homeowners to refinance on the property or new owners to get financing when the home is sold.

Additionally, it's important for people who get Hero financing to contact their mortgage lender right away so they can start taking money to pay that lien into an impound account. If not, you could get behind in your payment and end up having to pay double each month in order to catch up.

I hope this helped you understand PACE financing better. If you have any other questions about this financing or you're thinking about buying or selling a home, don't hesitate to give me a call or send me an email today. I look forward to helping you!

Next Episode

What Should Homebuyers Look for When Buying a Home?

If you’re in the market to buy a new home, what are the important things you need to look for?

Thinking of selling? Get a free home valuation

Thinking of buying? Search all homes for sale on the MLS

If you’re a homebuyer out shopping for a new home, what should you look for in that home?

First, you should keep the resale value of the home in mind, or the price and affordability for future buyers. You should then consider the neighborhood it’s located in and the size of the home.

Next, look for a structurally sound home. Look at the “guts” of the home and not just the design or the materials used in the construction. Examine factors like the plumbing, the electrical framework, and how much life is left in the roof. And don’t forget to order a thorough home inspection.

Hire a real estate agent that will help you know what you need to know.

Also, consider what kinds of costly repairs may be required on the property and how that will play in negotiations. Look at the condition of the roof, the plumbing, the electrical system, the heating and air conditioning systems, etc.

Finally, you need to hire a real estate agent that will show you what things you need to look for when buying a new home.

If you have any questions about this topic or are in need of an agent to help you buy or sell real estate, please don’t hesitate to give me a call or shoot me an email. I’d be glad to help you.