West Bloomfield

FHA TO THE RESCUE FOR HOME SELLERS

Many buyers today are using FHA mortgages to get into properties as this financing source has changed incredibly over the past many years. Just in the past couple of years, the percentage of FHA mortgages has grown dramatically. The loan limit is about $297,000; and, that is the loan limit not the purchase price.

The down payment required is only 3.5% which is up from the previous 3% but still under most conventional loans of today. Sellers are also able to contribute up to 6% for closing costs and/or pre-paids and still may be able to waive tax pro-rations.

All this may sound confusing to a normal buyer; but, your real estate agent can help you construct your offer to purchase and should be informed about all of these possible concessions. That brings us to the possible tax credit that a buyer today might receive and how that can also be used to aid in his FHA financing. If you qualify as a buyer, you might be eligible for up to an $8000 tax credit toward your 2009 tax return. This is money that can soon be used toward your FHA financing to pay for your closing costs, to buy down your interest rate or to add more to your down payment after the 3.5%. As this is going to cause lenders more work and calculations on their loans, not all lenders may be willing to offer this benefit in their financing packages even though this has now been approved. More lenders may hop on board as the kinks are worked out.

Again, this is something that your real estate agent can help you find out about. FHA is not credit score driven; however,now FHA does offer the best rates for the better credit score purchasers. Also, the qualifying ratios are more lenient than the conventional loan qualifying ratios, allowing a buyer more leniency in the amount financed. If you have not considered purchasing a home with FHA financing, you just might want to investigate this alternative to your home ownership.