April 24, 2018

FHA Loans Become Less of a Bargain

Being out blog is about Fort Lauderdale Real Estate any announcement about FHA mortgages must included the fact that as an overall percentage of mortgages in with Fort Lauderdale Real Estate home sales, FHA loans are a small percentage of all loan origination’s. Jumbo loans are available, but on these loans over $625,000 the fees are larger than the ones discussed here, The reasons are simply that most condominiums are not FHA approved and often Fort Lauderdale single family home market values exceed the limits of FHA lending without increased fees. That all being said the Federal Housing Administration most commonly known as FHA,announced it will raise premiums by 0.1%, on most of the new mortgages it insures.

Their loan are predominately low down payment loans, so the impact maybe more dramatic than it sounds in certain real estate markets. Borrowers who take a 30-year mortgage and put less than 20% down often are FHA borrowers. These buyers who put down more than 5% will pay an annual insurance premium of 1.3%, buyers who put down less than 5% down will pay a premium of 1.35%. In the past these premiums disappeared as a homeowner gained equity in the property but were always difficult to have removed. It now appears that most buyers can expect to pay these premiums for the entire time they have the loan. We have always felt when ever possible avoid loans that charge these premiums as it will add to the overall cost of home ownership and rob of you equity that you will accumulate faster with a conventional loan.

FHA historically has been the source for first time home buyers, and it is therefore sad that their fees and qualifications continue to rise as this will effect the number of first time home buyers able to enter any real estate market. In Fort Lauderdale Real Estate, FHA buyers face another obstacle and that is that it often hard to find a seller willing to accept an offer with smaller down payments, and the additional inspections qualifications required by FHA.  FHA loans face a reputation problem when it come to getting to the closing table and in a market where multiple offers are lately the norm, FHA buyers are having a harder time finding property in todays Fort Lauderdale real estate market.