FHA Loans....

Re: FHA Loans....

• kaylie622 member

  

  March 2012

  We got approved for both FHA and conventional 5% and 10%. We're not going with FHA because of the PMI and the extra fees that get rolled into your mortgage. Also with conventional it automatically goes away once you've got 20% paid in. With FHA you HAVE to pay the PMI for a certain number of years. The upside of FHA is that if you need money for closing, you can request up to 6% from the seller. If you do 5% conventional you're usually restricted to 3%.
  

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• lil_jen051708

  March 2012

  We used to have one and when we bought last year we looked into it.  We decided that the upfront 1% of the loan, the higher monthly mortgage insurance and that you had to pay PMI for 5 years was what turned us off.

  We ended up going with a 5% down conventional loan.  We brought a little more for the downpayment (5% vs 3.5%) but our monthly PMI can be dropped in 12 months.  This was really important to us because our house needed a lot of work.  We did all the work so far in cash and hopefully has increased the value of our home!  So this summer we can apply to get the house reappraised and drop PMI.  Our PMI is something like $83 /month on a roughly $150k loan.  I can't remember the estimates for FHA PMI but it was well over $100/month.  

  

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• trouillard

  March 2012

  Ok, thank you for confirming my thought process. These are the same reasons I was having doubts.....

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• kaylie622 member

  

  March 2012

  Additionally, if you're in a competitive market FHA isn't looked upon as favorably by sellers since the approval/appraisal process is harder.
  

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• Leila'sMommy

  March 2012

  kaylie622:

  Additionally, if you're in a competitive market FHA isn't looked upon as favorably by sellers since the approval/appraisal process is harder.
  

  How is the FHA process harder?

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• kaylie622 member

  

  March 2012

  The way my agent explained it to me, for an FHA appraisal they approach it with the mind set that you might never pay a dime on the mortgage. They want to make sure they don't end up with a lemon on the books and that you're not borrowing more than you should. Appraisal is still important for conventional, but it tends to go more smoothly which sellers like. She basically told us that if we went FHA in our market, we'd have a tough time since our competition would likely be conventional buyers.
  

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