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Old 03-12-2006, 03:31 PM   #1
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Default FHA or Conventional

What'* the difference between an FHA and a conventional home loan?
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Old 03-12-2006, 05:10 PM   #2
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aaaaaaaaaaaaaaa basically the financing groups that fund the mortgage. The big difference I believe is the standards the house is put through. FHA is better because of two main items. It holds the higher standard for checking out a house, and the money originates from the government so usually if your house qualifies .....the interest will be lower and house proven sound.
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Old 03-13-2006, 08:37 AM   #3
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Talk to a cerified Mortgage Officer on this one. This crap is so confusing, it'll make you're head spin.

Even as a vet, I can get a better loan without using VA, or FHA....

It'* just freakin wierd stuff, man. Income taxes make more sense than home loans.
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Old 03-13-2006, 09:48 AM   #4
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Right up my alley since I'm a system administrator on mortgage orignation software and the mortgage processing system...not to mention I'm a real estate investor on the side!

Quote:
Originally Posted by gxp rules
aaaaaaaaaaaaaaa basically the financing groups that fund the mortgage. The big difference I believe is the standards the house is put through. FHA is better because of two main items. It holds the higher standard for checking out a house, and the money originates from the government so usually if your house qualifies .....the interest will be lower and house proven sound.
No, not exactly.

FHA is a government backed loan for borrowers who have less than a desired amount of a downpayment. Typically you need 5% down to buy a primary residence. If you don't have the 5% down then you have to go FHA. Conventional programs require at least 5% down.

FHA (or HUD....HUD is a division of FHA) insures that the lender gets repaid if you default on the mortgage. Seeing how there would be a little down payment you wouldn't have as much of a vested interest in paying your mortgage on time. Plus, you have little to loose if your home gets repossesed by the lender.

FHA/HUD does require a thorough inspection of the property before they'll back the loan. And, the interest rate on an FHA loan is typically higher than a conventional loan due to the "built in insurance" being issued by the government. The one other thing to keep in mind is that an FHA loan is not exempt from MIP (mortgage insurance premiums). Depending on amount lent, the premiums can easily exceed $100 per month. Those premiums are NOT tax deductible.

If possible, don't go FHA unless you absolutely have to. There are a lot of hoops to jump through and the end result is a higher interest rate. Closing costs are typically higher on FHA loans as well (more documents that require a signature at closing).
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Old 03-13-2006, 10:31 AM   #5
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Not trying to argue, since I've already admitted I don't understand this crap, but I was already approved for a $240,000 mortgage with nothing down. Unfortunately, that would have put the payments way out of my budget.....
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Old 03-13-2006, 10:39 AM   #6
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Quote:
Originally Posted by MOS95B
Not trying to argue, since I've already admitted I don't understand this crap, but I was already approved for a $240,000 mortgage with nothing down. Unfortunately, that would have put the payments way out of my budget.....
Yes, that is possible. I was speaking of the typical situation. Your interest rate on that nothing down program is probably higher than what you'd get on a mortgage with 10% down. I'm also willing to bet the closing costs were quite high on that program. Not to mention there may have also been a stipulation about paying off the note early.
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Old 03-13-2006, 10:41 AM   #7
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Quote:
Originally Posted by vital49
Quote:
Originally Posted by MOS95B
Not trying to argue, since I've already admitted I don't understand this crap, but I was already approved for a $240,000 mortgage with nothing down. Unfortunately, that would have put the payments way out of my budget.....
Yes, that is possible. I was speaking of the typical situation. Your interest rate on that nothing down program is probably higher than what you'd get on a mortgage with 10% down. I'm also willing to bet the closing costs were quite high on that program. Not to mention there may have also been a stipulation about paying off the note early.
No freakin' idea..... lol!!!

We're still shopping for a house we can afford, and that'* enough to make my brain hurt.
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Old 03-13-2006, 10:41 AM   #8
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Quote:
If possible, don't go FHA unless you absolutely have to. There are a lot of hoops to jump through and the end result is a higher interest rate. Closing costs are typically higher on FHA loans as well (more documents that require a signature at closing).
That is the opposite of what the mortgage lady told us on Saturday...
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Old 03-13-2006, 10:43 AM   #9
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Quote:
Originally Posted by J Wikoff
Quote:
If possible, don't go FHA unless you absolutely have to. There are a lot of hoops to jump through and the end result is a higher interest rate. Closing costs are typically higher on FHA loans as well (more documents that require a signature at closing).
That is the opposite of what the mortgage lady told us on Saturday...
What part of that is opposite?

Keep mind...those loan officers are nothing more than salespeople. It'* in their best interest to get you to spend more; forcing you to borrow more. That lines their pockets with more commissions.
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Old 03-13-2006, 10:49 AM   #10
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Talk to a couple of loan people, or get references. We trust the guy we're going with because he has done several loans for our landlord over the years.

They do work on commision, so some will be selling you thier commission, some will actually want to help you.

Sad, ain't it? Knowing it'* the largest, most important purchase the average person will make in their lives, and people will still try and screw you.....
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