FHA loans for homes... Worth it?

Discussion in 'Community Discussion' started by XNine, Oct 22, 2005.

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  1. XNine macrumors 68040

    XNine

    Joined:
    Apr 7, 2005
    Location:
    Why are you wearing that stupid man suit?
    #1
    Hi there. Well, I want to buy my first place. A large condo (with a garage) and was wondering if getting an FHA loan is worth it? Is it helpful and is there anything I should watch out for?

    Thanks!
    Z
     
  2. JDar macrumors 6502a

    JDar

    Joined:
    Dec 7, 2003
    #2
    FHA loans are supposed to be the easiest to qualify for. They will require mortgage loan insurance until payback is over 80%, which is not a desirable expense considering the same amount of term insurance bought individually is usually much cheaper. On the other hand down payment can be low with FHA.

    Certainly look around at other mortgage loan providers--there is a lot of competition out there.

    Congratulations and good luck getting your first home.
     
  3. TimDaddy macrumors 6502

    Joined:
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    Location:
    Versailles, KY (and that's pronounced Vurr-sales)
    #3
    I bought my first home a couple of years ago with an FHA loan. I had house fever and nothing saved up. I got in with a 3% down payment at 6%, which is pretty good for a sub 700 credit score. I think it is a pretty good loan, but the eighty-something dollar per month mortgage insurance payment kind of sucks. If the interest rate were slightly higher, amounting to eighty-something a month, and I had no mortgage insurance, it would be a better deal because the mortgage insurance is not tax deductbible. It's not a huge difference, though. Just make sure you aren't buying more house than you can afford. Luckily, I have paid extra on my home, so I have a little "cushion" of equity. If you buy the absolute most house you can afford, and the economy tanks, and you lose some income, you may be screwed. If you can't make the payment, but the value drops below what you owe, you're in big trouble! Also, watch out for closing costs. Mine were only around $2,000. I've heard up to 3 or 4k is reasonable, but I have heard of banks charging up to $8,000! (On loans that are under $150,000.)

    Mister Positive here! Sorry. Good luck, happy house hunting! I don't need to seem too negative, just watch out for yourself.
     
  4. skubish macrumors 68030

    skubish

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    Feb 2, 2005
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    Ann Arbor, Michigan
    #4
    We bought our first home using a FHA loan. It is a good deal because of the low down payment.

    Regarding the required insurance: Just make sure to refinance in a couple of years. By then you should have the 20% equity in your home and the mortgage insurance can be dropped. (That is what we did).

    The bad thing about FHA loans is the max you can borrow is tied to the average home price in your area.
     
  5. XNine thread starter macrumors 68040

    XNine

    Joined:
    Apr 7, 2005
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    Why are you wearing that stupid man suit?
    #5
    Hmmmm. This is all very good information! It's jsut all around the net you will hear about how great FGHA is, and everyone else will tell you that FHA is good for first time buyers.

    Well, It's good to know it may not be the best option. 80 a month, eh? That's not too bad but it's money that I could spend elsewhere.

    See, if my girlfriend won't move with me (she says she'll never buy a condo, and we live in an apartment right now) then I'd just rent one of the rooms to a friend for half the cost of the mortgage every month.

    Sounds like an FHA insurance payment along with HOA would be raping me.

    Thanks for the info my friends!
     
  6. skubish macrumors 68030

    skubish

    Joined:
    Feb 2, 2005
    Location:
    Ann Arbor, Michigan
    #6
    Basically you only go for a FHA loan if you don't qualify or don't have the downpayment for a regular mortgage. In our case we didn't have enough for the downpayment for a regular mortgage.

    And I agree with your GF: I won't buy a condo either. Condos are difficult to sell.
     
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