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Tim Howard

FHA: 2nd Time Buyer?

Friday, May 24, 2013 - Article by: Tim Howard - VanDyk Mortgage - Message

There are many misconceptions in the mortgage world but no other is more apparent than the 1st Time Buyer myth for FHA loans. The typical response to an FHA loan offer, "Aren't those only for first-time buyers?". The answer is absolutely not. Like any other mortgage the main concerns are FICO, DTI and reasonable assurance that the debt will be repaid. There's no rule that says you can only qualify if you're a first time buyer. In fact it doesn't have to be a purchase loan at all. You can just as easily refinance your current mortgage into an FHA program if it makes sense.

FHA loans typically offer the lowest fixed rates in comparison to Conventional & Non-Agency loans, especially on 30yr Fixed programs. Also the guidelines are very liberal. Typically with Conventional programs you have to have perfect credit and a very reasonable DTI(Debt to Income) ratio to get the very best rate available which will still be higher than FHA. If your FICO is below 740 the pricing adjustments start to take a toll on the rate and it can pretty ugly pretty fast. Not that I condemn Conventional loans in any way but you need to fit into that category fairly well otherwise you should look at other options. FHA is a wonderful option to have, if you're above 80% LTV and don't have perfect credit or a perfect DTI, FHA may be just the program you've been searching for. The guidelines, low rates and generally streamlined loan process makes it an ideal choice whether you're purchasing or refinancing. Let's face it, todays lending atmosphere is a scary one, turn times on many loans exceed 45 days, many are much longer making it a harrowing experience to say the least. FHA scenarios however are typically much easier and faster because of the liberal guidelines. Keep in mind that this article doesn't even begin to scratch the surface in regards to the pros & cons of an FHA or even less so, a Conventional scenario.

The main difference in the two programs is you. It's your specific scenario and needs that will dictate which direction you should take. There are a million and one scenarios so choose a Loan Officer that knows his or her stuff and will explain the differences so that you can make the choice that yields the most benefit. Best of Luck! If you need help deciding or just have general questions feel free to contact me directly via our Cincinnati,OH Branch website.

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