why do sellers prefer conventional over fha

Would we have PMI for the life of the loan? The upside is that the 3.25% rate is likely much better than the rate you’d probably receive for a conventional loan. They can also help you with any snags you might run into. The same can be said for conventional. For example, it caps out at $331,760 in Phoenix, Arizona. All of these factors make FHA loans an ideal choice for first-time homebuyers. my agent has other back up offers on stand by, in case my contract falls thru. Hi Colin first thanks for all the helpful information. Both FHA and conventional loans can be had for very little down! Colin my apologies they are offering 20k not 20%. Payments will be more than they are now by several hundred dollars and cost me 4k a year in PMI alone. Some sellers care about the future of their home, especially if they built it and are the original owners. Loan officers are confusing me because each seems to want to push me in varying directions and I don’t feel like I can get a straight answer. I wouldn’t bank on FHA rates being higher, so if reality turns out to be different, it can certainly change the outcomes in the table above. My mortgage person has drawn the process out with one excuse after another and on the last day of September informed me I can no longer go conventional because I have been in the house less than two years. What is the definition of movement in science? What is internal and external criticism of historical sources? Copyright © 2006-2021 - The Truth About Mortgage.com, Powered by the lovely Wordpress platform. So it doesn’t really need to stay in-force for life. It’s a question many ask, especially when comparing loan options to conventional, VA, or other non-FHA mortgages. Do I still have to pay mortgage insurance if I choose a FHA loan ? I want to refinance (cash out) my property, and leave it at 80% LTV. That means you can use any bank you wish and/or shop your rate quite a bit more. Otherwise the waiting period can be pretty long to get a mortgage. Keep in mind that FHA loan offerings are also pretty basic. The owner of the house did pay the closing cost of 5k. It is through an FHA loan. Both loan programs offer competitive mortgage rates and closing costs, and flexible underwriting guidelines, so you’ll really have to do the math to determine which is best for your particular situation. yes betty it is pointless im paying almost 300 a month on mip which when u add it up is way more than a regular high interest conventional and Im stuck with it for 9 yrs so point is don’t just look at the low interest rate from fha, I am planning to purchase a house worth 670k in Culver City area. Since 2013, many FHA loans now require mortgage insurance for life, making them a lot less attractive and expensive long-term! With an conventional loan, I have the 7% down payment, DTI is 12% and the credit score. I’ve mentioned the various advantages of going conforming…more loan options, no PMI for life (or at all), lower DP requirement, etc. The only thing is that i dont want to pay the extra insurance for 30 yrs i dont know if its a good plan to go with the FHA loan…. Meanwhile, conventional mortgage loans require a minimum 620 FICO score. My sister and I want to buy a house together but she filed bankruptcy 3 years ago due to her husband having a heart attacks and no income. Lender is offering 20% closing cost help. They have a similar mission to promote homeownership and compete with one another, but they are two completely different entities. My wife and I were approved for an FHA loan up to $250,00 and we told them we can only put a downpayment of $10,000 down if necessary. Meanwhile, Fannie Mae will allow the actual income-based repayment, even if it’s $0. This is why the FHA has become a lot less popular. Still would put down at least 3-4% on a USDA, just wondered if those numbers come out better. Additionally, conventional loans can be used to finance just about any property, whereas some condo complexes (and some houses) aren’t approved for FHA financing. But it doesn’t sound like you have a choice anyway…good luck! I also reached out to my loan officer as suggested here. They do not want to accept a mediocre offer and leave others on the table. While FHA loans have come a long way and pose very few problems for sellers, many still hold back. Find real estate on Long Island. Fannie Mae is one of the two government-sponsored enterprises (a quasi-public company) along with Freddie Mac that issues conforming mortgages. Underwriting is one of the biggest variables. If a seller receives equal offers from buyers with conventional mortgages, he or she might choose those over an FHA borrower. So if you’re looking for something a little different, the FHA probably isn’t for you. As such, a seller whose short-sale home is in disrepair or needs more than minor cosmetic work may prefer a conventional offer because it is less likely to result in a request for repairs. That pretty much ends the discussion if you’re planning to buy even semi-expensive real estate there. I have always gone with friends but don’t know if I am getting the best rates. Q. With a conventional loan, which includes both conforming and non-conforming loans, you can get your hands on pretty much any home loan program from a 1-month ARM to a 30-year fixed, and everything in between. In any case your actual rate of 3.75% is what monthly payments should be based on. Mortgage Insurance: FHA vs. Here is a list of several of reasons: Only a 3.5% minimum down payment on an FHA loan as compared to 5% on conventional… You’re probably better off putting 10% down if possible to expand your options and lower your interest rate. Of course, you’ll need to plug in your actual numbers into a mortgage calculator to see what works for you. From a seller perspective, the most important thing is to evaluate each offer in terms of its overall strength and merits. if yes what are the requirements thanks. On a $200,000 loan, this will add $2,700 to your loan amount, and you will pay it off over the term of the loan. So if you’ve got 20% to put down, a conventional loan should be the better deal because you won’t have to pay PMI every month (or upfront), even if the interest rate is slightly higher on the conventional loan. FHA loans: FHA loans require a minimum down payment of either 3.5% or 10%, depending on the borrower’s credit score. Don’t just take their word for it! It is not FHA approved. Can I have a conventional loan with 15% down payment and then in say 6 months use savings to buy an investment property, and if so what down payment would I need as a minimum for the rental property ? 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