So I just got some information I wanted to share about FHA loans in California. These are just some notes I took but could be valuable:
- 3.5% down payment needed minimally
- FHA loans require a credit score of only 600 and above
- The mortgage insurance is minimally 5 years. After 5 years if you paid at 20% of the loan or that your property has gain a 20% equity, mortgage insurance can end.
- FHA accepts gifts funds. Meaning, if a family member or a friend decides to give you money for the purchase, it is fine.
- By giving more than 3.5%, you can lower your monthly payment though you have to really look to see if it’s really worth it. You may add an extra $8,000 and your monthly payment may only be reduced by $50. It really depends what is important for you. If the difference is not substantial, only do the 3.5% and keep your cash for repairs and other purchases you may want to do (a new washing machine, new sofas, etc…).
- Always make sure that the agent that you are dealing with is licensed.
Additional notes that don’t really have anything to do with FHA loans: In this market most of the sellers pay the closing cost, especially bank owned properties (such as foreclosures). They even pay the full cost which is usually about 3.5% of the full price of the house. They may only pay 3/4 of the closing cost and simply have to pay the difference.
Without being a promotion for any particular bank but must say that after looking around Wells Fargo seems to have the best FHA loans in the U.S. They seem to be the ones that originate largest number of these types of loans.
Thanks for reading,
D