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FHA and VA Mortgages

Posted on August 3, 2007 by Ray Williams (NMLS #216267).

You may have been turned off by government loans before because you were told “Don’t get a loan that has mortgage insurance”. Well with the changes in congress last November, did you know that mortgage insurance is tax deductible on your primary residence when your MAGI is under $100K? That’s right? It makes you wonder if congress knew things were going to change in 2007, dramatically!

The beautiful thing about a government loan is it works for everyone. Great credit, zero credit, credit with problems in the past. First time buyers and people who have bought homes before can all qualify for an FHAloan or a VA loan (if you have veteran eligibility status).

Another great thing is that interest rates for FHA and VA mortgages aren’t, I repeat, not driven by your credit score!!!! Right now you can be looking at a 6.5% rate with little to no money down. That is on a 30 year fixed mortgage that has NO pre-payment penalty. That is HUGE considering the FHA only requires 3% down payment. Not to mention FHA allows that the money can be gifted to you from a relative as an example. Currently, you can also receive the money from a grant from a non-profit organization. FHA also allows for what is called a non-occupant co-borrower, meaning a family member can co-sign to help if your debt to income is too high to qualify on your own. You can’t get a rate like FHA with less then 5-10% down otherwise.

In regards to getting the FHA and VA approval it is important to know who you are working with. Just because the loan officer says they can do FHA and VA loans you will want to make sure you are working with an experienced FHA or VA originator. Our business is 35% FHA and VA loans and we understand that FHA and VA have philosophies that allow for what are called compensating factors.

For example, you made have had some slow pays on your student loans when you graduated college but have since been paying on time. Although your credit score is going to be affected by these slow pays that have caused your credit score to dip, you can still be eligible for an FHA mortgage, even if the underwriting decision isn’t an automatic approval. Additional compensating factors can be time on the job, savings, alternative credit, or even time in the same residence as an example.

You may have great credit and a great job. If you are like many people you either don’t have or don’t want to put too much money down on a house. FHA and VA are great solutions for this situation as well. You may have the money to put down but would prefer to have it in a higher interest bearing account where you can earn high interest rates.

The main ponit to understand is that lenders are tightening their guidelines and desire to lend money to people on second mortgages is disapating. That will cause more people to have mortgages with mortgage insurance that is either financed (LPMI) or Borrower paid (BPMI). These types of loan come with far higher rates then FHA or VA mortgages by far.

If you are interested in learning more about FHA and VA, or what is going on in the mortgage industry shoot me an email r_w_mtg@yahoo.com. If you need a mortgage please apply online or call Ray 303.779.0591 for a no hassle consultation where you can get honest answers from an experienced and respected professional.

Cheers~

Ray

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